The US dollar posted its biggest two-week rally against the yen since 1988 amid bets that US president-elect Donald Trump’s administration will pursue fiscal stimulus, boosting the US economy and triggering monetary tightening.
The greenback touched the strongest level against the yen since May and appreciated the past 10 trading sessions versus the euro, an unprecedented streak.
Traders see an interest-rate increase next month by the US Federal Reserve as a virtual lock, enhancing the appeal of US dollar holdings. They put the chances of a Fed rate increase next month at virtually 100 percent, compared with about 70 percent at the beginning of the month.
The US currency’s appreciation over the past two weeks came as US Treasury yields surged on bets Trump’s spending pledges will spark faster inflation.
Fed Chair Janet Yellen on Thursday suggested the central bank remained on course to tighten policy next month.
“It’s right to assume that if we get sizable fiscal stimulus, it is and should be dollar-positive,” said Daragh Maher, head of US currency strategy in New York at HSBC Holdings PLC. “That’s the fixation and you don’t fight it.”
The US currency over the past two weeks added 7.6 percent to ¥110.91, and reached the highest since May.
The US dollar’s back-to-back weekly gains versus the euro drove it to US$1.0588 per euro as it touched the strongest since December.
The Bloomberg Dollar Spot Index, which tracks the US currency against 10 major peers, reached the highest since February.
It is up 1.5 percent this year, after accumulating losses for most of the year.
The pound this week fell 2.1 percent to US$1.2327 as of 5pm in London on Friday. It dropped to a 31-year low of US$1.1841 on Oct. 7 and is down about 17 percent versus the US dollar since June 23, the day of the Brexit vote.
Sterling gained 0.4 percent to 85.93 pence per euro.
In Taipei, the New Taiwan dollar on Friday fell against the greenback, shedding NT$0.142 to close at NT$32.010, the lowest since July 27, when it hit NT$32.068 per US dollar. The NT dollar this week fell 0.7 percent against the greenback from last week’s US$31.801.
Additional reporting by CNA
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