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Dollar Fell Set for its First Weekly Slump Since September

The U.S. dollar fell on Friday morning in Asia, set for its first weekly slump since the start of September. It recovered from a one-year peak as investors focus on when the Fed will hike interest rates.

The U.S. dollar index that measures the dollar against a basket of other currencies, fell by 0.02% to close at 93.938.

The U.S. dollar against the Japanese yen increased by 0.27% to trade at 113.97. Meanwhile, the risk-sensitive currency, the Australian dollar, surged 0.07% against the greenback to 0.7420. Its New Zealand counterpart was up 0.28% against the dollar to 0.7055.

The U.S. currency against the Chinese yuan declined by 0.04% to settle at 6.4356. Meanwhile, the British pound versus the greenback was at 1.3687, gaining 0.1%.

The euro declined by 0.09% against the dollar to settle at $1.1588. Earlier on Thursday, it hit $1.1624 for the first time since September 4.

Remarkably, improving risk sentiment boosted global stocks, commodity prices, and bond yields. It is also weighing on the safe-haven U.S. dollar. The currency only maintained the momentum of the past five weeks versus the Japanese yen.

The dollar had rallied since early September 2021 on expectations the Federal Reserve would start asset tapering earlier than anticipated. The expectations rise as the economic recovery from Covid-19 continues and energy prices continue to soar.

Minutes from the central bank’s latest meeting reveal that asset tapering will likely start in November 2021. However, officials remain sharply divided over inflation. Significantly, money markets are now pricing in around 50/50 odds of a 25-basis point rate hike by July 2022.

The market is now waiting for U.S. data, including retail sales and the University of Michigan consumer sentiment and Michigan consumer expectations indexes, due on Friday.

Remarkably, data released on Thursday showed that the producer price index increased 0.5% month-on-month in September. The data also revealed that a lower-than-anticipated 293,000 initial jobless claims were filed during the week.

In cryptocurrencies, the largest digital currency by market cap, Bitcoin, held about $57,200. Earlier on Thursday, it hit a five-month peak of $58,550.

The second-largest cryptocurrency, ether, traded at about $3,780. It was trading close to a more than one-month peak of $3,825.89 hit overnight.

Oil prices rose on Friday, heading for gains of more than 2% for the week. U.S. West Texas Intermediate (WTI) crude futures soared 0.4% to settle at $81.61 a barrel. Meanwhile, Brent crude futures surged 0.3% to $84.28 a barrel.

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