Dollar Shines Amid Rate Cuts and Economic Shifts

The U.S. dollar experienced a strong weekly performance as investors anticipated slower rate cuts by the Federal Reserve next year. While the dollar firmed against the euro and Swiss franc, it rose against the yen amid reports of a potential halt in rate hikes by the Bank of Japan.

The dollar soared to its strongest weekly performance in a month, driven by investor anticipation of slower rate cuts from the Federal Reserve in the upcoming year. The U.S. currency maintained its solid stand against the euro and Swiss franc following rate cuts in those regions.

However, it gained ground against the yen after reports suggested that the Bank of Japan might refrain from hiking rates in their meeting next week. The dollar index, measuring its strength against six major currencies, climbed by 0.1% to 107.11, marking a significant 1.1% weekly gain, its best in a month. Recent U.S. data hinted at a cooling job market, aligning with expectations and supporting the Fed's anticipated rate cut on December 18.

In Europe, the British pound saw a decline as unexpected UK economic contraction added pressure. The euro and Swiss franc also struggled following recent central bank rate cuts. Meanwhile, the Canadian dollar faced challenges amid U.S. tariff threats, and the Chinese yuan eased in response. Notably, Bitcoin edged above $100,000, nearing its record high.

(With inputs from agencies.)