The U.S. dollar ended its ninth successive weekly gain against a basket of other major currencies on Friday as expectations for an early hike in U.S. interest rates continued to bolster investor demand.
The dollar rallied to fresh six-year highs against the yen on Friday, with USD/JPY up 0.23% to 107.33 at the close. For the week, the pair added 2.05%.The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was last down 0.18% to 84.32, but ended the week with gains of 0.39%. It was the longest series of successive weekly gains in more than 17 years.
Expectations that the Federal Reserve is growing closer to raising interest rates continued to boost the dollar against the yen and the euro, with the Japanese and European central banks likely to stick to a looser monetary policy stance.
A study by the San Francisco Fed published on Monday indicated that central bank officials see rates rising sooner than markets expect.
The Fed was expected to cut its asset purchase program by another $10 billion at its upcoming policy meeting next week which would keep it on track for winding up the program in October, and to start raising interest rates sometime in mid-2015.
Data on Friday showing that U.S. retail sales rose in August and another report showing that consumer sentiment rose to a 14-month high in September underlined the view that the economic recovery is deepening.
The yen remained under pressure after Bank of Japan Governor Haruhiko Kuroda said Thursday that the bank would be prepared to immediately loosen monetary policy or implement other measures if its 2% inflation target becomes difficult to meet.
EUR/USD was up 0.33% to 1.2964 late Friday, holding above the 14-month trough of 1.2858 reached on Tuesday.
The single currency has remained under pressure since the European Central Bank unexpectedly cut rates to record lows on September 4 and unveiled new easing measures in a bid to shore up inflation in the euro area.
The pound also pushed higher against the dollar on Friday, with GBP/USD up 0.18% to 1.6267 in late trade. The pair fell to 10-month lows on Wednesday as the prospects of Scottish independence rattled financial markets.
However, uncertainty over what currency an independent Scotland would use, as well as concerns over how much of the U.K. national debt it would take on looked likely to cap sterling’s gains ahead of the September 18 referendum.
In the week ahead, investors will be focusing on the outcome of Wednesday’s Fed policy meeting. Fed Chair Janet Yellen was to hold a press conference following the meeting.
Market participants will also be closely watching the outcome of Thursday’s independence referendum in Scotland.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, September 15
Markets in Japan are to remain closed for a national holiday.
Switzerland is to produce data on producer price inflation.
In the euro zone, Germany’s Bundesbank is to publish its monthly report.
The U.S. is to release reports on manufacturing activity in the Empire State and industrial production.
Tuesday, September 16
The Reserve Bank of Australia is to publish the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank’s perspective.
The U.K. is to publish data on consumer price inflation, which comprises the majority of overall inflation.
The ZEW Institute is to release its closely watched report on German economic sentiment, a leading indicator of economic health.
Canada is to release data on manufacturing sales.
The U.S. is to produce data on producer price inflation.
Wednesday, September 17
New Zealand is to publish data on the current account.
The U.K. is to publish data on the change in the number of people employed and the unemployment rate, as well as data on average earnings. In addition, the Bank of England is to release the minutes of its latest policy meeting.
The euro zone is to release revised data on consumer price inflation.
The U.S. is to produce data on consumer prices. Later Wednesday, the Federal Reserve is to announce its federal funds rate and publish its rate statement. Fed Chair Janet Yellen is to hold a press conference following announcement.
Thursday, September 18
New Zealand is to publish data on gross domestic product, the broadest indicator of economic activity and the leading measure of the economy’s health.
Japan is to release data on the trade balance, the difference in value between imports and exports.
Switzerland is also to release a report on the trade balance. At the same time, the Swiss National Bank is to announce its libor rate and publish its monetary policy assessment.
The U.K. is to release data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity. Meanwhile, Scotland is to hold its independence referendum.
The U.S. is to produce a flurry of economic data, including reports on initial jobless claims, building permits, housing starts and manufacturing activity in the Philadelphia region.
Friday, September 19
Canada is to round up the week with data on consumer prices and wholesale sales.
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