Dollar near 1-year highs, sterling tumbles

The dollar was trading near one-year highs versus major peers on Friday ahead of a US jobs report and after a string of central banks this week pushed back against faster tightening of monetary policy.

Investors will be closely watching new US labour market data due later on Friday, which could sway the timing of Federal Reserve interest rate increases.

The dollar index, which measures the greenback against a basket of six rivals, has strengthened around 1 per cent over the past fortnight.

It consolidated its gains on the day, last up 0.2 per cent at 94.527, closing in on last month’s one-year high of 94.561.

Investors have been forced to reset monetary policy expectations this week, after some of the biggest global central banks knocked back bets for early rate hikes.

The Bank of England’s decision on Thursday not to lift rock-bottom benchmark rates proved the biggest shock for markets and pushed sterling to its biggest one-day fall in more than 18 months by as much as 1.6 per cent on the day.

Sterling fell a further 0.5 per cent on Friday, hitting a fresh one-month low of $1.34250. It was last down 0.4 per cent.

Earlier in the week, the Reserve Bank of Australia also stuck to its dovish stance despite inflationary pressure and held rates.

The Aussie is on track for around a 2 per cent weekly fall, and was last down 0.4 per cent on the day at $0.73665.