The US dollar had the longest rally since teenagers bought Beatles albums and Lyndon Johnson was president as the US Federal Reserve signaled interest rates would rise next year while other central banks pushed stimulus plans.
The US Dollar Index rose for a 10th consecutive week, the longest since at least March 1967. Sterling rose after Scotland rejected independence, reviving bets the Bank of England (BOE) would join the Fed in raising rates.
The yen fell versus all of its 16 major peers as the Bank of Japan pledged to maintain stimulus to fight deflation, while the European Central Bank debuted a loan program. A report next week may revise second-quarter US economic growth higher.
“The Fed and the BOE are the two central banks that’ll start hiking rates next year, and we like being long dollar and sterling,” said Athanasios Vamvakidis, head of Group of 10 foreign-exchange strategy at Bank of America Merrill Lynch in London. “There’s more room for investors to accumulate long positions on the dollar.”
The US Dollar Index, which Intercontinental Exchange Inc uses the gauge to track the greenback against the currencies of six trade partners, increased 0.6 percent this week in New York to 84.735. It was the highest closing level since June 30, 2010.
The yen dropped against the US dollar for a sixth week, the longest losing streak this year, depreciating 1.6 percent to ￥109.04 per greenback. It touched ￥109.46, the weakest level since Aug. 29, 2008. The US currency gained 1 percent to US$1.2829 per euro, the strongest since July 10 last year. The euro rose 0.5 percent to ￥139.89 in a second weekly advance.
The pound rose for the first week in three versus the euro and the US dollar after the results of Scotland’s vote were announced and opponents of independence won, 55 percent to 45 percent.
The UK currency advanced 1.2 percent, the most since June, to ￡0.7876 per euro and reached ￡0.7810, the strongest since July 2012. Sterling rose 0.1 percent to US$1.6288 and touched US$1.6525, the highest since Sept. 2.
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