FX.co ★ Dollar Set for Best Week in a Year

The dollar index remained above 99.3 on Friday, poised for a nearly 2% increase over the week, marking its most substantial weekly gain in a year. This strength was primarily due to significant weaknesses in the yen and euro. The yen is expected to weaken by nearly 4% against the dollar this week, following the victory of fiscal conservative Sanae Takaichi in Japan's leadership race, which signals a continuation of higher spending and accommodative monetary policy. Meanwhile, the euro has depreciated by approximately 1.5% against the dollar amidst political instability in France, where President Emmanuel Macron is seeking his sixth prime minister in under two years. In the United States, the government shutdown has entered its ninth day, as the Senate remains unable to finalize a funding agreement. This impasse is delaying critical economic reports that are crucial for guiding the Federal Reserve's perspective on rate cuts. Current market predictions place a 95% likelihood of a quarter-point rate cut occurring this month, while the probability for a rate cut in December has decreased to 80% from the previous 90%.