TOKYO – The U.S. dollar weakened on Friday as concerns about the economy and global trade tensions encouraged expectations of more interest rate cuts by the Federal Reserve.
The dollar index, which tracks the greenback against a basket of currencies, was little changed at 98.23, but is set for its biggest weekly drop in almost three months, amid a U.S. government shutdown that delayed key economic data.
Against the Japanese yen, the dollar fell 0.2% to 150.12. The euro rose 0.1% to $1.1701. Sterling added 0.1% to $1.3446. Bank of Japan Governor Kazuo Ueda said the central bank could raise interest rates if growth and inflation forecasts improve, supporting the yen.
Read More: Dollar Hits 7-Week Low Amid Fed Cut Hopes
Fed Governor Christopher Waller signaled support for another rate cut due to mixed job market data. Fed Governor Stephen Miran also favors more aggressive cuts, while uncertainty remains around Fed leadership changes. The Fed’s Beige Book showed signs of economic weakness, including layoffs and reduced consumer spending.
Trade tensions between the U.S. and China escalated, with China rejecting U.S. calls to ease rare earth export controls. Investors sought safer assets, including gold, cryptocurrencies, and other hedges. Bitcoin rose 0.6% to $108,534.66. Ether gained 1.8% to $3,919.71.
Analysts say the combination of economic uncertainty, trade frictions, and U.S. policy issues makes it difficult for the dollar to find upward momentum in the near term.