Dollar heads for weekly gain as Fed sticks to its guns

Shafaq News/ The dollar eased on Friday but remained on track for its largest weekly gain in a month after Federal Reserve officials reiterated their commitment to raising U.S. interest rates more than markets currently anticipate.

The U.S. currency fell against the pound, which edged higher after a volatile session on Thursday in the wake of Britain's budget for tax rises and spending cuts.

Data that showed resilience in consumer spending last month has helped to wipe out some of the expectation among investors that Fed rates might be nearing a peak.

St Louis Fed President James Bullard was the latest Fed official to push back on market hopes for a pause in interest rate hikes, saying that even on dovish assumptions the funds rate needs to rise to at least 5-5.25% to curb inflation, from 3.75-4% currently.

More pessimistic assumptions would recommend it climb above 7%, he said.

Money markets show investors currently expect U.S. rates to peak at about 5% in June next year.

The euro rose 0.1% against the dollar to $1.0373 while the pound gained 0.3% to trade at $1.19105.

(Reuters)