HomeFinancial MarketsDollar Headed for First Weekly Gain Since February

Dollar Headed for First Weekly Gain Since February

The dollar was put on course to achieving its first weekly gain in nearly two months on Friday with investors expecting the Federal Reserve to continue its tight monetary policy by implementing another interest rate increase in its next policy meeting in May.

The dollar index, which measures the greenback against six other major currencies, gained 0.2% on Friday, thus amounting to a weekly rise of 0.4%. This comes as a boom in the services sector overshadows extended declines in manufacturing.

While the euro was down 0.1% against the dollar at $1.0959 after recovering from a session low of $1.0938, the dollar extended gains against the British pound, rising 0.3% to 88.84 pence.

City Index strategist Fiona Cincotta believes that while the Federal Reserve remains determined to continue its interest rate hikes, the economy at large is fostering the need for tight fiscal policy due to its own trajectory.

“At some point, there is going to be a reconciliation here – either the Fed gives some clues of a dovish pivot, or the market needs to reassess what’s going to be actually happening over the rest of the year,” Cincotta explained.

Money market shows traders expect the Federal Reserve to implement a quarter-point U.S. rate hike next month, while some rate cuts are expected once the economy slows down.

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