Dollar set for best week in two months, yen weakens toward 160
TLT•The dollar was on track for its strongest weekly rise in two months as traders increased bets on a larger Federal Reserve rate hike, while the yen hovered near 160 per dollar. US two-year Treasury yields rose about 34 basis points this week to around 4.87%.
1. Dollar gains
The dollar held near a 19-month high on Friday as stronger-than-expected US inflation data and hawkish Federal Reserve comments lifted expectations for a larger-than-usual rate hike next month. Traders were pricing in about a 90% chance of a 25-basis-point hike, while the dollar index rose 0.15% to 103.37, on track for its biggest weekly gain since September.
2. Yen near 160
The yen was steady at 159.70 per dollar, around its weakest since early September, and had fallen about 1% this week. Japanese Finance Minister Satsuki Katayama said the government would respond appropriately to currency volatility, as traders watched for possible intervention.
3. Other currencies and yields
US two-year Treasury yields rose about 34 basis points this week to around 4.87%, their largest weekly jump since April 2025. The euro fell 0.26% to $1.103 and was on course for a fourth straight week of losses; the Australian dollar fell 0.52% to $0.6773, while the New Zealand dollar lost 0.41% to $0.5525.
