The dollar rose against a trade-weighted basket of its rivals on Friday, on track for its biggest weekly rise in nearly six weeks as optimism grows that a U.S. tax bill will pass.
the only exception, gaining against a swathe of currencies amid relief
that Britain and the European Union had struck a deal on Friday that
will allow a second phase of talks to begin on the British exit from the
The dollar index, which gauges the U.S. currency against a
basket of six major rivals, was up 0.2 percent on the day at 93.961, up
more than 1 percent for the week, its biggest rise since late October.
Senate Republicans agreed to talks with the House of Representatives on
sweeping tax legislation on Wednesday, amid early signs that lawmakers
could bridge their differences and agree on a final bill before
self-imposed Dec. 22 deadline.
Passage of the tax bill and strong
data would strengthen the case for more U.S. rate increases in the next
year, a possibility which bond markets look unprepared for. The Federal
Reserve is set to raise interest rates next week, but futures markets
expect less than two rate hikes over the next year.
"The market is
behind the curve on interest rate hike expectations and that should
start to catch up next year," said Adam Cole, chief currency strategist
at RBC Capital Markets in London.
Forex traders were also awaiting
the U.S. non-farm payrolls report later in the day, which is expected
to show 200,000 new jobs were created in November, according to a
Sterling was the big outperformer in early trading,
with the currency jumping to a six-month high against the euro and a 1
1/2-year high against the Japanese yen. It rose 0.3 percent against the
Britain and the EU reached an agreement on Friday to move
on to talks about trade and a transition period after they outlined
their separation, easing pressure on Prime Minister Theresa May.