Dollar set for big weekly gain as Powell sends yields up, China data mixed By Reuters

By Stella Qiu

SYDNEY (Reuters) – The U.S. dollar was poised for a big weekly gain on Friday, towering near one-year highs as a hawkish turn from the Federal Reserve chief sent short-term Treasury yields higher, leaving Wall Street and European stock market futures in the red.

Asian shares looked to end a brutal week on a steadier note, helped by Chinese data showing retail sales in the world’s second-biggest economy beat forecasts in October in a welcome sign for consumer spending, although other indicators missed.

Overnight, Fed Chair Jerome Powell said there was no need to rush rate cuts with the economy still growing, the job market solid and inflation still above the 2% target, tempering expectations for a rate cut next month.

Fed fund futures slumped with December off 7 ticks and imply just 71 basis points of rate cuts by the end of 2025. A rate cut next month is no longer a high probability event, with just 61% priced in, down from 82.5% in the prior session.

That lifted the dollar across the board, especially against the euro as expectations for more aggressive policy easing in Europe further undermined the single currency already trading at one-year lows.

Goldman Sachs now sees a greater risk that the Fed could slow the pace of easing sooner, possibly as soon as the December or January meetings, while JPMorgan still tips the Fed to cut in December though they expect the central bank could dial down the easing pace in January.

“After the sugar hit of Trump’s election and its subsequent impacts on expectations for company profits, the market’s enthusiasm is being watered-down by greater interest rate uncertainty, especially going into next year,” said Kyle Rodda, a senior analyst at Capital.com.

On Friday, Nasdaq futures fell 0.4% while eased 0.3%. EUROSTOXX 50 futures fell 0.4%.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.4% but was still down 4.1% for the week, its biggest weekly loss since June 2023.

A regional healthcare index underperformed with a drop of 0.7%, after U.S. President-elect Donald Trump nominated Robert F. Kennedy Jr., a prominent vaccine sceptic, to lead the top U.S. health agency.

Tokyo’s , however, gained 0.7% driven by a pull back in the yen, which boosted the outlook for Japanese exporters. Still, it was down 1.7% for the week.

The dollar has gained for five days on the yen, and was up another 0.1% to 156.36 , the highest level since July.

But yen bears were on guard as Japan’s finance…