The U.S. dollar is on track to post its second consecutive weekly gain against major global currencies, buoyed by surprisingly strong economic data that have eased expectations for near-term interest rate cuts by the Federal Reserve.

🔹 Retail and Unemployment Data Exceed Forecasts

U.S. retail sales in June grew more than analysts had predicted. Meanwhile, new jobless claims fell to a three-month low. These numbers have reinforced the view that the Fed can afford to keep rates steady for longer before considering any cuts.

🔹 Dollar Index Holds Firm

The U.S. Dollar Index, which tracks the greenback against six major currencies, stood at 98.46 on Friday—up 0.64% for the week. On Thursday, it reached a high of 98.95, the strongest level since June 23.

🔹 Inflation Back in Focus

Consumer prices in June rose at the fastest pace in five months. Analysts believe this could be the result of recent tariffs starting to push prices upward. Market expectations for rate cuts have softened, with projected easing now just under 0.5% by December—down from 0.5% anticipated earlier this week.

⚠️ Political Uncertainty Weighs on Sentiment

Despite the current strength, the dollar remains about 9.3% below its level at the start of the year. Concerns over U.S. fiscal policy and rumors of President Trump possibly firing Fed Chair Jerome Powell have added to market anxiety.

These rumors triggered a brief dollar sell-off earlier this week. Analysts from the Commonwealth Bank of Australia warned that "the dollar remains vulnerable to downside risks if U.S. policy concerns continue to undermine investor confidence."

📉 Concerns over massive spending, tax policies, and Trump’s repeated criticism of Powell have fueled volatility. Spring sell-offs reminded investors of how quickly sentiment can shift in response to policy uncertainty.

💱 Dollar vs. Global Currencies

🔹 Dollar vs. Yen

The dollar hovered near 148.60 yen, just below Wednesday's 3.5-month high of 149.19. The yen weakened ahead of Sunday’s upper house elections in Japan, where polls suggest the ruling party may lose its majority—raising concerns over future monetary policy and trade negotiations.

🔹 Dollar vs. Euro and Pound

The euro climbed to $1.1626 on Friday, recovering from a low near $1.1556 but still ending the week down 0.59%. The British pound rose to $1.344, trimming its weekly loss to 0.41%.

🔹 Japan–U.S. Tariff Tensions

Japanese trade envoy Ryosei Akazawa met with Commerce Secretary Gina Raimondo on Thursday, attempting to block the planned 25% tariff set to take effect after August 1.

💸 Crypto and Market Reaction

Bitcoin briefly surged above $123,000 before retreating just below $120,000. The market received a boost after Congress passed new regulations for dollar-pegged stablecoins—seen as a stabilizing move for the digital asset industry.


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