Dollar Dominates as Global Currencies Shift

The dollar experienced a surge, marking its best weekly performance in a month, as investors speculated on the Federal Reserve's slower rate-cutting pace next year. Meanwhile, the yen and sterling weakened due to economic contractions and dovish central bank policies. Global currency dynamics continue to shift amid economic uncertainty.

The dollar recorded its strongest weekly performance in a month, buoyed by investor anticipation of a measured rate cut approach by the Federal Reserve next year. This upturn came as the yen and sterling faced downward pressure due to anticipated central bank policies and a surprising UK economic contraction.

Analysts noted the dollar index rose by 0.075% to 107.04, forecasting its largest weekly gain in a month. Market data suggests the Federal Reserve may cut rates on Dec. 18, but with a prevailing expectation of a slower reduction trajectory in 2025.

As global markets react, traders predict limited chances of a significant rate increase by the Bank of Japan, which could further influence dollar and yen exchange dynamics. Concurrently, the euro and Swiss franc adjusted amidst their central banks' recent rate decisions, signifying ongoing volatility in global currency landscapes.

(With inputs from agencies.)