The dollar is poised to achieve its best week against the yen in three months on Friday after Federal Reserve Chair Jerome Powell and a group of U.S. central bank officials shattered market expectations that interest rates had peaked. For cryptocurrencies, Bitcoin and Ether have stabilized near their highest levels in several months, with renewed speculation about the imminent approval of a Bitcoin exchange-traded fund, injecting new life into digital assets.
A significant number of policymakers at the Federal Reserve, including Powell, stated on Thursday that they remain uncertain whether interest rates are high enough to conclude the fight against inflation, comments that the markets perceived as hawkish, leading to a rise in the U.S. currency. The dollar stabilized near a one-year high of 151.355 yen on Friday and touched its highest levels in a week against both the Australian and New Zealand dollars.
Tina Ting, a market analyst at CMC Markets, commented, "Powell's speech was very hawkish and really impacted sentiment." These statements from Federal Reserve officials followed a week of keeping interest rates unchanged, reinforcing expectations that they may have peaked, which caused the dollar and Treasury yields to decline afterward.
However, the dollar regained its footing this week and is on track for weekly gains of about 1.3% against the yen, marking its best performance since August. Meanwhile, the Australian and New Zealand dollars are heading towards weekly losses of 2.3% and 1.75% respectively against the dollar, their largest declines in months. The Australian dollar was last seen at 0.63615 against the U.S. currency, having fallen to a weekly low of 0.6352 earlier in the session. The New Zealand dollar reached 0.5895 after also hitting a weekly low of 0.5886.
The euro remained stable at 1.06665 dollars, while the British pound rose 0.05% to 1.2227 dollars, with both currencies on track for weekly losses of approximately 0.6% and 1.2% respectively.
In the meantime, Bitcoin, the largest cryptocurrency in the world, stabilized near its highest level in 18 months, trading at $36,653 after peaking at $37,978 in the previous session, the highest level since May 2022. Ether, the second-largest cryptocurrency, surged to its highest level since April at $2,136.50. The prices of digital assets have risen amid speculation regarding imminent approval for a spot Bitcoin exchange-traded fund from BlackRock.
