The dollar faced instability on Friday, poised for a weekly decline, as investors anticipated a surge of U.S. data in the wake of the government’s reopening, which is expected to indicate a weakening economy. During the session in Asia, there were significant fluctuations in currencies, particularly with notable movements in the British pound and the South Korean won, while the onshore yuan reached its highest level in more than a year. However, the prevailing narrative continued to reflect a hawkish adjustment in U.S. rate expectations, as investors currently perceive a probability of less than 50% for a 25-basis-point reduction in December. The decision came after remarks from additional Federal Reserve officials indicating a careful approach towards further easing overnight, highlighting concerns regarding inflation and indications of relative stability in the labor market.

Despite this, the dollar remained under pressure, declining against the euro and subsequently rebounding above the $1.16 threshold. The common currency was last valued at $1.1641. The Swiss franc maintained its position close to a three-week high, stabilizing at 0.7920 per dollar. In relation to a range of currencies, the dollar remained weak, hovering close to a two-week low at 99.11. The dollar index is on track for a weekly decline of 0.45%. “Starting from next week, we’re going to get a lot of economic data from the U.S., and we think it’s going to be pretty bad,” said Joseph Capurso. The White House has suggested that the U.S. unemployment rate for October might remain unavailable, as it relies on a household survey that was not carried out during the shutdown.

“When you’re in the fog, you drive slower… when you don’t know what’s going on in the economy, maybe you slow down your cuts,” stated Capurso. The expectations for U.S. rates in 2026 remain largely unchanged, with a rate cut in January nearly fully priced in. In other currencies, sterling declined by 0.32% to $1.3149, unable to maintain its 0.45% overnight increase against a softer dollar. The decline in the pound followed a report from the Financial Times indicating that British Prime Minister Keir Starmer and Finance Minister Rachel Reeves have decided against raising income tax rates, representing a significant change just weeks before the budget on November 26. “If it means fiscal tightening won’t be as drastic as expected, that might be less bad for the economy. However, foreign investors in the gilt market will be further troubled by what it means for the underlying fiscal position, which will justify the knee-jerk negative reaction to the story,” said Ray Attrill. The South Korean won experienced a 1% increase against the dollar on Friday, following the commitment from the nation’s foreign exchange authorities to implement measures aimed at stabilizing a fluctuating currency, alongside suspicions of market intervention involving dollar sales.

The weakened yen experienced a slight recovery due to the dollar’s retreat, yet it remained close to the nine-month low reached earlier this week. The current value was 154.34 per dollar, indicating a projected decline of 0.6% for the week. In Australia, the local currency was experiencing declines, following a drop in the prior session attributed to widespread risk-averse sentiment stemming from anticipations of prolonged elevated U.S. interest rates. The Australian dollar increased by 0.22% to $0.6545, and the New Zealand dollar also saw a rise of 0.64% to $0.5690. The kiwi received support from local data indicating that manufacturing activity saw expansion in October. Additionally, the Reserve Bank of New Zealand announced plans to relax restrictions on mortgage loan-to-value ratios starting December 1. In China, the onshore yuan reached a one-year high of 7.0908 per dollar, as traders noted dollar selling by local exporters following the currency pair’s breach of a significant threshold. Data released on Friday indicated that China’s new home prices experienced their most significant monthly decline in a year during October, underscoring the ongoing weak demand within the troubled property sector.