Market Watch: Dollar's Wild Week Amid Trump's Return and Global Economic Shifts

The dollar experiences volatility as markets assess the impact of Donald Trump's expected return to the presidency on the U.S. economy. Global market reactions, including China's legislative developments and European political shifts, add complexity to the currency's trajectory and international economic policies.

The dollar took a breather Friday, poised to end a volatile week with a slight gain. As markets pondered the implications of Donald Trump's anticipated return to the White House, questions arose regarding its impact on the U.S. economy and interest rate outlook.

Investors kept a close eye on Beijing's five-day Standing Committee meeting of the National People's Congress, seeking insights into China's stimulus measures that could bolster the yuan and Antipodean currencies. Meanwhile, the dollar trimmed earlier sharp gains as traders adjusted positions following Trump's election win.

In currency movements, the British pound rallied toward $1.30, helped by easing interest rates, while the yen hovered around 153 per dollar. The euro faced a weekly decline amid a German political crisis that toppled Chancellor Olaf Scholz's coalition. As the Federal Reserve cut rates by 25 basis points, caution lingered over future monetary policy adjusted to potential inflationary pressures from Trump's tariff plans.

(With inputs from agencies.)