In global markets, the value of the dollar against a basket of currencies rose last week for the third consecutive time, driven by uncertainty in the stock markets and increased expectations that the Fed will further raise interest rates.
The dollar index, which shows the movement of the value of the U.S. dollar against the other six major world currencies, strengthened last week by 1 percent, to 104.17 points.
At the same time, the dollar strengthened by 0.75 percent against the European currency, causing the price of the euro to slide to 1.0725 dollars. The dollar exchange rate against the Japanese currency, on the other hand, rose by 1.9 percent, to 140.60 yen.
The dollar’s strengthening for the third consecutive week is attributed, among other factors, to its status as a safe currency in uncertain times.
On Wall Street and other major global stock exchanges, there was uncertainty due to the uncertainty surrounding negotiations between Democrats and Republicans in the U.S. regarding raising the debt ceiling.
On Saturday, it was announced that a preliminary agreement had been reached, which means there should not be any disruption in financing government obligations.
Support for the dollar was also provided by messages from officials of the U.S. central bank indicating that further interest rate increases are possible to curb inflation.
A series of data shows that economic growth and inflation are slowing, but not quickly enough, prompting Fed leaders to indicate that interest rates are likely to continue rising.
As a result, the money market now estimates that there is a 60 percent chance that the Fed will raise rates by another 0.25 percentage points in June, while a week ago those odds were around 20 percent.
Thanks to this, the dollar index reached its highest level in two months by mid-week. However, on Friday it lost some of its gains.
