The dollar rose for a fourth straight day on Friday, boosted by another round of hawkish Fed rhetoric, while weaker US equities weighed on risk-sensitive currencies.
Boston Fed President Sue Collins and Chicago Fed President Austan Goolsbee said inflation has broadened, supporting tighter policy and vigilance against demand overheating.
San Francisco Fed President Mary Daly said the economy remains solid, but persistent inflation keeps the bias tilted toward further rate hikes.
Dallas Fed President Lorie Logan said Treasury markets are functioning well and banks have improved liquidity access, but Fed backstops should be strengthened.
BofA Global Research now expects the Fed to raise rates by another 25 basis points in January 2027.
Markets largely shrugged off October PPI, which rose a below-forecast 0.3%. Attention now turns to next week's Treasury auctions, Fed speakers and ASEAN meetings involving world leaders.
Treasury Secretary Scott Bessent expects US trade deals with Mexico and Canada despite tariff threats on Mexico, and said Treasury backed adding Megaspeed to the entity list months ago.
DXY hit a fresh 19-month high and is headed for its biggest weekly gain in two months, with bullish momentum pushing the index toward the upper end of its 20-day Keltner band as the Aussie, Swiss franc and Swedish krona lag.
One-month DXY risk reversals edged higher to 0.16% in favor of USD calls, while broader volatility measures and DXY futures turnover remained steady.
EUR/USD fell to a fresh 19-month low at 1.1026 on broad USD strength and firm Treasury yields, with the bias remaining bearish below the 10- and 21-DMAs.
GBP/USD softened to 1.3215 in late NY trade, leaving a bearish bias below 1.3250 ahead of UK jobs and CPI data next week.
USD/JPY slipped to 159.52 on a volume spike, echoing Thursday's pullback from 160, but favorable yield spreads keep the bias bullish above 159.00 despite rising intervention risk.
AUD/USD fell from 0.6800 to a 10-month low at 0.6772 on broad USD strength. The bias remains bearish below the 10-DMA.
Treasury yields were up as much as 4 basis points. The 2s-10s curve rose about 4 basis points to +28.2bp.
The S&P 500 fell about 0.50%, recovering from the worst levels of the day.
WTI oil edged up 0.17%
Gold was little changed, copper fell about 1.8% and Bitcoin slumped for a second day.
Heading toward the close: EUR/USD -0.23%, USD/JPY -0.11%, GBP/USD -0.22%, AUD/USD -0.43%, DXY +0.19%, EUR/JPY -0.32%, GBP/JPY -0.24%, AUD/JPY -0.54%.(Editing by Burton Frierson Robert Fullem is a Reuters market analyst. The views expressed are his own)
