The dollar was on track for its biggest annual gain since 2015 on Friday, the final trading day of a year dominated by Federal Reserve interest rate hikes and fears of a sharp slowdown in global growth.
European stock indexes were in the red in early trading on Friday. Asian stocks rose early in the session after Wall Street sentiment was boosted by U.S. jobs data on Thursday that suggested the Fed’s rate hikes are reducing demand for labor.
Traders were also focused on China’s prospects. Optimism about reopening the country after three years of tight restrictions was tempered by rising COVID-19 infections, which threaten further economic disruption.
- In a day of scarce operations, the Dollar Index It was down about 0.1 percent at 103.90.
So far in 2022, the dollar has gained about 8.6% against a basket of six major currencies — its biggest annual gain in seven years — but trimmed some gains in recent weeks as investors expect the rate hike cycle to end next year.
“I expect the dollar king to lose its crown and make a more decisive turn in the middle of next year,” said Moh Siong Sim, currency strategist at the Bank of Singapore.
The euro was flat at $1.066, on track to close the year down 6.2 percent, extending last year’s 7 percent decline. Weak eurozone growth, the Ukraine war and the Fed’s tightening policy have put pressure on the euro this year.
The greenback was down about 0.9 percent against the yen at 131.805 and about 0.4 percent against the yuan at 6.9438. Sterling was down 0.2%, on track for an 11% annual decline.