The dollar is headed for its best weekly performance since July as rate cut bets ease

SINGAPORE (Reuters) – Stocks rose on Friday, on course to record their strongest weekly performance since July, as expectations for a sharp and early cut in interest rates this year eased, ahead of the release of U.S. jobs data later on Friday.

U.S. private sector employers on Thursday hired more workers than expected in December, indicating continued strength in the labor market, which should continue to support the economy.

This helped offset the weakness of the dollar. The dollar index, which measures the U.S. currency's performance against a basket of currencies, was at 102.39 in early trade on Friday. The index rose 1 percent this week, its strongest performance since the week ended July 23.

The dollar's recovery will face a test when the non-farm payrolls report is released later in the session. Economists polled by Reuters had expected 170,000 jobs to be created in December, compared with 199,000 in November.

“The strength in the dollar we see in early 2024 could be related to demand for safe havens as equity markets struggle,” said Hamish Pepper, fixed income and currency strategist at Harbor Asset Management.

CME Group's Fed Watch tool showed a decline in traders' bets on a rate cut, as markets now see a 65 percent chance of a rate cut in March, up from 86 percent the previous week.

Along with the dollar's rise, the yen fell significantly this week as the Japanese currency fell 2.5 percent against the greenback, posting its weakest weekly performance since June.

On Friday, the yen fell 0.06 percent to 144.72 per dollar, after touching a more than two-week low of 144.90 in the previous session.

In recent trade, it rose 0.09 percent to $1.0953, on track to post a weekly decline of 0.8 percent, ending a three-week streak of gains.

The pound hit $1.2694 in recent trades, up 0.12 percent on the session, but it is still headed for a slight dip on the week.

In terms of cryptocurrencies, it was down 0.91 percent at $44,082.61, while Ether was down 0.53 percent at $2,263.75.

(Prepared by Dua Muhammad for Arabic Bulletin)