Dollar extends weekly rally as strong data delays fed cuts

The U.S. dollar looks set to record a second straight weekly rise against other major economies, driven by strong economic data that have eased worries about Fed rate cuts.

Data this week showed U.S. retail sales climbed more than analysts had forecast in June, while new claims for unemployment benefits fell to their lowest level in three months. Those results reinforced the belief that the Fed can hold rates steady for longer before considering a reduction, according to a Reuters report.

As of 00:38 GMT, the dollar index, which tracks the greenback against six leading currencies, was unchanged at 98.456. That kept it on course for a 0.64% gain this week, following a 0.91% jump in the previous seven days.

On Thursday, the index even peaked at 98.951, its highest level since June 23.

A recent report showed that U.S. consumer prices rose in June by the most in five months. This suggests that recent tariff hikes may be starting to push up inflation.

Investors now expect slightly less easing, just under 0.5% in rate cuts by December, down from about 0.5% forecast earlier this week.

Despite this week’s strength, the dollar remains 9.3% below its level at the beginning of the year.

In March and April, fears of unpredictable U.S. trade policies led to a big sell‑off that hurt confidence in U.S. assets, including the dollar, Treasury yields, and stocks.

Markets reacted to Trump firing Powell rumor

Concerns about the U.S. budget have shaken investors. Lawmakers’ large spending and tax plans have raised doubts about fiscal stability. At the same time, President Trump has repeatedly scolded Fed Chair Powell for not cutting rates faster.

Analysts at the Commonwealth Bank of Australia warned that the dollar “remains vulnerable to the downside if concerns about U.S. policymaking further undermine investor confidence in USD assets.”

They pointed to this week’s sudden dip, triggered by rumors that Trump planned to fire Powell, as proof of that risk.

Bitcoin hovered just below $120,000 after briefly hitting $123,153.22, and the market got a boost when Congress passed rules for dollar‑pegged stablecoins.

Dollar strong against yen while euro and pound made modest moves

Meanwhile Japan’s yen weakened as Sunday’s upper‑house elections approached, with polls showing the ruling party could lose its majority. A change in power could make monetary policy less predictable. It can slow down tariff talks with Washington.

On foreign exchange markets, the dollar was trading around ¥148.60, not far from Wednesday’s three‑and‑a‑half‑month peak of ¥149.19.

Japan’s lead trade envoy, Ryosei Akazawa, held talks on Thursday with Commerce Secretary Gina Raimondo in an eleventh‑hour bid to block a 25% tariff scheduled to apply once August 1 has passed.

Elsewhere, the euro climbed 0.25% to $1.1626, bouncing back from its Thursday trough near $1.1556, though it still finished the week 0.59% lower.

The British pound rose about 0.13% to $1.344, cutting its weekly loss to 0.41%.

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