Dollar Holds Strong After Robust U.S. Data

The U.S. dollar steadied on Friday after sharp gains in the previous session, supported by stronger-than-expected U.S. economic indicators that dampened expectations for aggressive Federal Reserve easing this year.

Dollar Index on Track for Best Weekly Gain in Two Months
The dollar index eased 0.1% to 98.37 but remained poised for a 0.8% weekly climb, its strongest since early August. On Thursday, upbeat data on GDP, jobless claims, durable goods, and wholesale inventories all exceeded forecasts, reinforcing perceptions of underlying economic resilience.

Against the yen, the greenback edged up 0.1% to ¥149.68, nearing the 150 threshold for the first time since early August, while the euro added 0.1% to $1.1680. Sterling dipped 0.3% to $1.3482.

Fed Rate Cut Bets Tempered
Markets are now pricing a roughly 60% chance of a 50-basis point cut by December, down from 82% a week ago, according to CME’s FedWatch Tool. Revised data showed U.S. GDP grew at an annualized 3.8% in Q2, stronger than the previously reported 3.3%.

Attention now turns to the personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge, due later Friday. Economists expect a 0.3% monthly rise in August and a 2.7% annual increase.

Japanese Inflation Keeps BoJ on Alert
In Tokyo, data showed September core inflation remained well above the Bank of Japan’s 2% target, maintaining pressure for a potential near-term hike. The yen slipped to eight-week lows following the news, alongside fresh U.S. tariff measures.

Trump’s Tariff Shock Adds Uncertainty
President Donald Trump announced sweeping new import duties, including 100% tariffs on branded pharmaceuticals, 25% on heavy-duty trucks, and 50% on kitchen cabinets. The move reignited fears of broader trade disruptions even as bilateral trade talks had recently eased market concerns.

Cryptocurrencies Show Modest Gains
Bitcoin inched 0.1% higher to $109,419.28, while Ether rose 1.6% to $3,951.60. Broader sentiment remained cautious following heavy crypto liquidations earlier in the week.