The dollar rose against the other major currencies on Friday as expectations for fresh central bank easing bolstered risk appetite, dampening safe haven demand for the yen and the Swiss franc.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.46% to 99.60 on Friday, just below Thursday’s more than one-month highs of 99.79. The index ended the week with modest gains of 0.64%.
The dollar rose to two-week highs against the yen, with USD/JPY up 0.91% to 118.77.
The yen weakened after Bank of Japan Governor Haruhiko Kuroda said Friday the central bank has room to provide additional stimulus if necessary.
The dollar rose to one-month highs against the traditional safe haven Swiss franc, with USD/CHF rising 0.83% to 1.0156 in late trade.
The euro remained on the defensive after European Central Bank Mario Draghi signaled Thursday that fresh easing measures could be rolled out as soon as the bank’s next meeting in March.
EUR/USD was at 1.0796 late Friday, down 0.72% for the session and ended the week with losses of 1.12%.
Expectations of fresh central bank stimulus bolstered sentiment in global financial markets. Global stocks strengthened after major declines since the start of the year and oil prices rebounded 10%, one of the largest daily rallies ever.
Indications of further possible stimulus also underlined the diverging monetary policy stance between the Federal Reserve and other world central banks.
Higher U.S. interest rates would make the dollar more attractive to yield-seeking investors.
In the week ahead, investors will be looking to Wednesday’s Fed policy statement for any indication that the bank is considering slowing the path of interest rate increases this year.
Markets will also be looking to Friday’s data on U.S. fourth quarter gross domestic product, which is expected to show that growth slowed to a modest 0.8% from 2.0% in the third quarter.
Ahead of the coming week, ezinvest.com has compiled a list of these and other significant events likely to affect the markets.
Monday, January 25
Australia is to release private sector data on business confidence.
In the euro zone, the Ifo Institute is to report on German business climate.
ECB head Mario Draghi is to speak at an event in Frankfurt.
Tuesday, January 26
Markets in Australia are to remain closed for the Australia Day holiday.
In the U.K., Bank of England Governor Mark Carney is to testify on the Financial Stability Report to the Treasury Committee.
The U.S. is to publish a report on consumer confidence.
Wednesday, January 27
Australia is to release data on consumer price inflation.
The Fed is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.
Later in the trading day, the Reserve Bank of New Zealand is to announce its latest monetary policy decision.
New Zealand is also to release trade data.
Thursday, January 28
Japan is to produce data on retail sales.
In the euro zone, Germany is to publish preliminary data on inflation and Spain is to report on the unemployment rate.
The U.S. is to release data on initial jobless claims, durable goods orders and pending home sales.
Friday, January 29
Japan is to produce figures on household spending and inflation.
The BoJ is to announce its benchmark interest rate and publish its rate statement. The announcement is to be followed by a press conference.
The euro zone is to release preliminary data on consumer inflation. Meanwhile, Germany is to report on retail sales and Spain is to produce preliminary data on fourth quarter GDP.
Canada is to release its monthly report on GDP.
The U.S. is to round up the week with a preliminary estimate of fourth quarter growth, as well as a look at business activity in the Chicago area and revised data on consumer sentiment.
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