The dollar was headed for its best week in a month on Friday, as hawkish remarks from Federal Reserve officials and stronger-than-expected retail sales data have put the brakes on a pullback that was triggered by signs of softening inflation.
was the latest Fed official to push back on market hopes for a pause in interest rate hikes, saying that even on dovish assumptions, the funds rate needs to rise to at least 5-5.25% to curb inflation, from 3.75-4% currently.The dollar rose modestly on the yen following Bullard's comments and is up about 1.2% for the week to 140.36 yen . It also rose 0.9% on the Australian dollar overnight to $0.6690 per Aussie, and is on course for its first weekly gain on the Aussie since mid-October.
"The Fed obviously doesn't want to acknowledge and has been saying there's a lot more work to be done," said Jason Wong, senior strategist at BNZ in Wellington. Fed funds futures pricing currently implies a peak rate just below 5% and for rates to start falling by late 2023. The Fed next meets Dec. 13-14.
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