The dollar remained near an 11-week high against other currencies on Friday, after U.S. economic data allowed the Federal Reserve to be more patient in its easing policy.
Asian stocks were mixed, with Japan’s Nikkei rallying on a weaker yen, while other markets looked cautiously toward a barrage of headline Chinese economic data later in the day.
The American currency was also supported by the possibility of an electoral victory for Donald Trump, whose tariffs and immigration policies are considered inflationary. This also supported gold, which held near the overnight record high.
The dollar index, which measures the US currency against six other currencies including the euro and the yen, remained stable at 103.78 after reaching 103.87 on Thursday, for the first time since August 2.
Last night, U.S. retail sales rose 0.4% last month, following an unrevised 0.1% rise in August. A separate report showed initial jobless claims fell by 19,000 to 241,000 last week, on a seasonally adjusted basis.
According to CME Group’s FedWatch tool, 74% of traders now believe the Fed will cut interest rates by 50 basis points over the final two meetings of the year, up from 85.6% a day earlier.
“The robust retail sales data has given the Federal Reserve greater flexibility in its rate path,” said James Kniveton, senior foreign exchange trader at Convera.com.
“Unlike the Eurozone, the Fed does not need to adjust its policy to support the economy.
The European Central Bank cut rates by a quarter point on Thursday, as expected, and four sources familiar with the matter told Reuters that policymakers were likely to make another cut in December.
The euro remained stable at $1.08315 after falling to $1.0811 in the previous session, its lowest level since August 2.
The dollar fell 0.15% to 150.02 yen, after jumping to 150.32 yen overnight, crossing the psychological barrier of 150 yen for the first time since August 1.
Democratic presidential candidate Kamala Harris’ lead over Republican Donald Trump has narrowed from seven points at the end of September to just three, according to a Reuters/Ipsos poll. And the rivals are statistically tied in the seven crucial states that will decide the race.
“The dollar is well-positioned to continue its rally as it continues to anticipate a Donald Trump victory,” said IG analyst Tony Sycamore.
The weak yen helped Japanese stocks rise on Friday, with the Nikkei gaining 0.4%.
Stocks in the rest of the region, however, were weak: Australia’s benchmark index lost 0.7% and South Korea’s KOSPI index fell 0.05%.
The mainland China and Hong Kong markets have not yet opened.
Data on growth and activity in China is due at 0200 GMT and is expected to show a slowdown that puts at risk this year’s economic growth target of around 5%.
Beijing unveiled the largest stimulus measures since the pandemic late last month, but investors were frustrated by a lack of details provided by Chinese authorities in subsequent briefings.
Gold was steady at $2,693.02 an ounce, closing in on last night’s record high of $2,696.59.
Crude oil futures rose on Friday, supported by a surprise drop in U.S. oil inventories and tensions in the Middle East, but prices headed for their biggest weekly loss in more than a month due to fears of a drop in demand.
The price of Brent rose 16 cents, or 0.2 percent, to $74.61 a barrel, while West Texas Intermediate oil was at $70.84 a barrel, up 17 cents, or 0. 2%.
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