Dollar on track for fourth straight week as inflation rises

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Dollar on track for fourth straight week as inflation rises

LONDON, Nov 19, Reuters -- The dollar was on track for a fourth straight week of gains against major rival currencies on Friday as traders bet on interest rates rising faster in the United States amid rising inflation around the world.

The euro is one of the biggest losers against the dollar, set to fall around 1% this week, as European Central Bank President Christine Lagarde has pushed back against expectations of policy tightening in the eurozone.

Lagarde said on Friday that the European Central Bank should not tighten policy as it could choke off recovery. The euro was down 0.5% at $1.13195 on the day.

The dollar index, which tracks the dollar against a basket of six major currencies, is on course for a 0.9% weekly gain.

The dollar was up 0.4% on the day at 95.899, close to the 16 month high of 96.266 hit on Wednesday.

Expectations are that the dollar will strengthen further into the year next year.

In an outlook report, analysts at UBS said that a combination of Fed tapering and slowing global growth should favor the U.S. dollar in 2022.

U.S retail sales beat expectations last week after last week's inflation surprise. In Europe, governments are battling a surge in COVID 19 cases and economic data has been mixed.

Kit Juckes, Societe Generale strategist Kit Juckes, said that previous post-GFC occasions when the euro traded below $1.10 were accompanied by a big euro short position.

If the question is 'will the market now get very short euros' then I think the answer is that it won't work unless data improves dramatically. The Japanese yen fell slightly against the dollar after a new 55.7 trillion yen $490 billion stimulus package was unveiled by Japan's government. The dollar was up 0.2% against the yen, at 114.490 yen.

The pound lost some of its recent gains, last down 0.4% at $1.34440.

In cryptocurrencies, the price is below $60,000 and set for its worst week in six months - last trading around $57,500.