Investing.com - The dollar hit its highest levels in nine months against a basket of the other major currencies on Friday, boosted by expectations that the administration of U.S. President-elect Donald Trump will spur growth and inflation.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 99.05 late Friday, its highest close since February 2.
For the week the index rose 2.02%, the largest weekly gain since November 2015.
The dollar was boosted by hopes that increased fiscal spending and tax cuts under a Trump administration will bolster economic growth and inflation.
Expectations for higher U.S. interest rates also remained intact amid optimism that a pick-up in growth will allow the Federal Reserve to tighten borrowing costs.
Investors currently price an 81.1% chance of a rate hike at the Fed's December meeting; according to federal funds futures tracked Investing.com's Fed Rate Monitor Tool.
Expectations for higher rates typically boost the dollar by making it more attractive to yield seeking investors.
The euro hit its lowest level since March against the dollar, with EUR/USD at 1.0854 late Friday.
The dollar pared back losses against the yen, with USD/JPY last at 106.67, not far from Thursday’s four-month peaks of 106.94. For the week, the pair gained 2.41%.
Sterling gained ground against the dollar and the euro amid hopes that Britain and the U.S. will continue to remain close despite political upheaval in both counties this year.
GBP/USD advanced 0.35% to 1.2592 late Friday and was up 0.85% for the week.
EUR/GBP was down 0.6% at 0.8627 and ended the week 2.89% lower.
Meanwhile, the Australian and New Zealand dollars were down around 1% against the greenback and the Canadian dollar hit the weakest level since March 1.
The Mexican peso, seen as the currency most vulnerable to the U.S election outcome, fell to fresh record lows, with USD/MXN at 20.83.
In a press conference on Wednesday Mexican central bank officials said they were watching market volatility but refrained from any measures to stem the peso’s decline.
In the week ahead, investors will be looking to congressional testimony by Fed Chair Janet Yellen on Thursday for fresh indications on whether interest rates will rise next month.
Japan is to release preliminary figures on third quarter growth on Monday and the U.S., the U.K. and Canada are all to release what will be closely watched inflation data later in the week.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, November 14
Japan is to release preliminary data on third quarter economic growth.
China is to produce figures on industrial production and fixed asset investment.
European Central Bank President Mario Draghi is to speak at an event in Rome.
New Zealand is to publish figures on retail sales.
Tuesday, November 15
The Reserve Bank of Australia is to publish the minutes of its latest monetary policy meeting, giving investors insight into how officials view the economy and their policy options.
Germany and the wider euro zone are to publish preliminary estimates of third quarter growth.
The ZEW Institute is to report on German economic sentiment.
The U.K. is to release a report on consumer inflation. Later in the day Bank of England Governor Mark Carney and other bank officials are testify on inflation and the economic outlook to the Treasury Committee.
The U.S. is to release data on retail sales and a report on manufacturing activity in the New York region.
Wednesday, November 16
The U.K. is to publish its closely watched monthly jobs report.
Canada is to report on manufacturing sales.
The U.S. is to release data on industrial production and producer prices.
Thursday, November 17
Australia is to release its jobs report.
The U.K. is to publish a report on retail sales.
The euro zone is to release revised inflation data.
The U.S. is to release a string of reports covering inflation, jobless claims, housing starts and manufacturing activity in the Philadelphia region.
Fed Chair Janet Yellen is to testify on the economic outlook before the Joint Economic Committee, in Washington.
Friday, November 18
ECB head Mario Draghi is to speak at an event in Frankfurt.
Canada is to round up the week with data on consumer prices.