Fed rate hikes in focus as the dollar re-tests from 1 yr high to USD rises
The U.S. retail sales on Friday will be next test for Dollars in America.
On Friday, the dollar index measures a greenback against six rivals, but it was little changed at 94.034. It is on track for a 0.1% decline this week despite hitting the highest since Sept. 25 of last year at 94.563 on Tuesday.
Better market sentiment, which has lifted global stocks, commodity prices and bond yields, is also weighing on the safe-haven dollar.
Only against the US - another safe haven - has the dollar managed to maintain momentum of the past five weeks, rising 0.16% on Friday and touching 113.885 yen for the first time since December of 2018.
We end the week with risk flying, wrote Chris Weston, head of research at Pepperstone in Melbourne, in a letter to clients.
Equities are going up hard, and the JPY has no place as hedge, because it would drag on overall portfolio performance, Weston said.
The greenback has rallied since early September on expectations the U.S. central bank would tighten monetary policy more quickly than originally expected amid an improving economy and rising energy prices.
Minutes of the September meeting confirmed this week that stimulus will begin tapering this year, although policymakers are sharply divided about inflation and what they should do about it.
The markets are pricing now predicting prices of a 25 basis point rate hike to 50 50 odds of a currency.
The dollar index is looking a little shaky, but any slippage should prove modest with Fed tapering now imminent, Westpac strategists wrote in a client note.
Any dips in the index should be limited to 93.70, they said.
The next significant test of the United States economy will come later on Friday with the release of retail sales figures.
The euro dropped 0.09% to $1.1588 after touching on Thursday in the first place since September 4 for the first time since then until $5624.
Sterling was briefly changed to $1.36705 with its climb to the highest since 24 Sept. at $1.3734 overnight.
The risk-sensitive Aussie currency edged down 0.07% to $0.74105, after reaching a high of $0.74265 in the previous session.
New Zealand's kiwi currency lost 0.06% to $0.7033, holding most of Thursday's surge of 1%, which brought it to the highest since Sept. 24 at $0.70415.
It is believed the Bitcoin value of $57,200 was boosted after it hit a five month high of $58,550 on Thursday.
Smaller rival ether traded around $3,780, still close to a more than one-month high of $3,825. 89 reached overnight.