The dollar is on track to have its longest winning streak since 2014

8 Sep 2023 , 09:59 AM

On Friday, the dollar was on track to post its longest weekly winning streak in nine years, helped along by a strong run of U.S. economic data that has also called into question the Federal Reserve’s plan to terminate its rate-hike cycle.

Due to the onshore yuan’s recent decline to a 16-year low, traders in Asia were closely monitoring changes in the Chinese currency.

Early trading saw the U.S. dollar index, which compares the dollar to its main competitors, remain stable at 105.02, not far from the session’s six-month high of 105.15.

The index, which has gained 0.7% so far, was on course to extend its gains for an eighth consecutive week.

The euro, the biggest component of the dollar index, was last slightly higher at $1.0701, having dropped to a three-month bottom of $1.0686 on Thursday. This meant that the single currency was facing eight straight weeks of losses.

Data released this week revealed that the U.S. services sector unexpectedly expanded in August and that unemployment claims fell to their lowest level since February last week. In contrast, industrial production in the euro zone declined slightly more than anticipated in July in Germany, the region’s largest economy.

Similar to other currencies, sterling remained close to Thursday’s three-month low and last traded at $1.2484, about to record a weekly loss of more than 0.8%.

The Australian dollar, which is frequently used as a liquid substitute for the yuan, was last 0.07% higher at $0.6381, although it was expected to lose more than 1% on a weekly basis.

The New Zealand dollar recently traded at $0.5890, on pace to decline by almost 0.9% for the week.

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