The U.S. dollar steadied in Asian trading on Friday, regaining some ground as both the British pound (sterling) and Japanese yen weakened. Meanwhile, weaker-than-expected Chinese trade data weighed on regional markets, dampening investor sentiment across Asia.
The dollar index, which measures the greenback’s performance against six major currencies, rose 0.1% to 99.796. The index has rebounded slightly after Thursday’s decline, when mounting expectations of a Federal Reserve rate cut erased its earlier monthly gains. However, the dollar remains confined within the same narrow trading range it has held since August.
“Markets are flying blind because we only have private sector data to rely on,” said Christopher Wong, a currency strategist at OCBC in Singapore. “There isn’t a clear big trend in the dollar right now, and that’s why Asian currencies are moving in response to broader market sentiment,” he added.
Dollar Strengthens as Traders Eye December Rate Cut
The ongoing U.S. government shutdown has delayed the release of key economic indicators, including the non-farm payrolls report, forcing traders to rely on private-sector data. Those reports showed that the U.S. economy shed jobs in October, particularly in the government and retail sectors, amid rising cost-cutting and the growing impact of artificial intelligence-driven automation.
Markets now see a stronger chance of a rate cut at the Federal Reserve’s next meeting in December, even as Chicago Fed President Austan Goolsbee urged caution, citing the lack of official inflation data during the shutdown. “When it’s foggy, let’s just be a little careful and slow down,” he told CNBC.
According to CME Group’s FedWatch Tool, traders are pricing in a 70% probability of a rate cut on December 10, up from 62% a day earlier.
Yen, Sterling, and Euro Edge Lower
Against the yen, the dollar gained 0.2% to 153.27, after data showed Japanese household spending rose 1.8% year-on-year in September — weaker than the expected 2.5% increase.
The Australian dollar remained flat at $0.64785, while the New Zealand dollar (kiwi) slipped 0.2% to $0.5620. The British pound also softened 0.2% to $1.31195, following the Bank of England’s decision to keep interest rates unchanged in a 5-4 vote, with Governor Andrew Bailey casting the deciding vote.
Meanwhile, British Finance Minister Rachel Reeves has reportedly told the budget watchdog that she plans to introduce higher personal taxes as part of the upcoming national budget, according to The Times.
The euro also weakened slightly, slipping 0.1% to $1.1535, moving away from a one-week high.
