Japanese yen slips to three-year low, dollar set for first weekly decline
The Japanese yen skidded to a three-year low on Friday and was set for its worst week since March 2020, while the dollar headed for its first weekly decline versus major peers since the start of last month as global risk appetite rebounded.
In cryptocurrency markets, the price of bitcoin topped $60,000 for the first time in six months and was not far from its record high on bets U.S. regulators will approve a bitcoin futures exchange traded fund.
The dollar index slipped 0.1% to 93.9 and was down 0.2% for the week in what would be its first weekly loss in six weeks. The greenback tends to rise when investors seek safety.
Global stock markets have rallied this week as fears about a stagflationary economy have been eased by forecast-beating corporate earnings in the United States.
The Japanese yen was the biggest loser, dropping to as low as 114.4 yen per dollar, its weakest since October 2018. The yen is a safe-haven currency and has been knocked by the rebound in sentiment including in Asia.
The dollar was last 0.5% higher at 114.31 yen -- that brought week-to-date gains for the greenback of 1.9% in what would mark the worst week for the yen since March 2020.
Analysts said investors who were long in dollars had been squeezed out of their positions in the past few days, and inflation data did not support a further rise in the currency.
"The lack of any upside surprise in U.S. CPI (consumer price inflation) data and confirmation of existing expectations on Fed tapering in the minutes provided no catalyst for additional USD buying and hence the sell-off," said MUFG analyst Derek Halpenny.
The greenback had rallied since early September on expectations the U.S. central bank would tighten monetary policy more quickly than previously expected amid an improving economy and surging energy prices.
Minutes of the Fed's September meeting confirmed this week that a tapering of stimulus is all but certain to start this year, although policymakers are sharply divided over inflation and what they should do about it.
Money markets are currently pricing in about 50/50 odds of a 25 basis point rate hike by July.
The next gauge for the U.S. economy's health comes later on Friday with the release of retail sales figures.
The euro edged up 0.1% to $1.1611 after touching $1.1624 on Thursday for the first time since Sept. 4.
Sterling rose 0.5% to $1.3741 following its climb to the highest since Sept. 24 at $1.3734 overnight.
The risk-sensitive Aussie dollar added 0.2% to $0.7428 before the gains fizzled.
New Zealand's kiwi dollar jumped 0.4% to as high as $0.7065, extending Thursday's 1% surge.