Dollar Surges Amid Fed's Hawkish Stance and Market Volatility

The U.S. dollar is set for a significant weekly gain as Federal Reserve Chair Jerome Powell adopts a hawkish stance, impacting short-term Treasury yields and global equities. Asian markets experience a mixed week, while European indexes drop amid healthcare stock declines. Investors brace for potential rate adjustments.

The U.S. dollar is on track for a major weekly rise, nearing one-year highs, following Federal Reserve Chair Jerome Powell's hawkish indications, which have propelled short-term Treasury yields upward, driving equities into negative territory. Asian financial markets ended a challenging week on a more stable footing, buoyed by surprising Chinese retail sales data, despite other economic indicators falling short of expectations.

In an overnight announcement, Powell confirmed that there is no urgency for rate cuts, given ongoing economic growth. Fed fund futures dropped, while the likelihood of a rate cut in the upcoming month diminished, with probability falling from 82.5% to 61%.

Meanwhile, the broader European markets faced a downturn, dragging the STOXX 600 lower, as healthcare stocks plummeted following President Trump's decision to nominate Robert F. Kennedy Jr. to head the leading U.S. health organization. Japan's Nikkei index managed a modest rise, supported by yen depreciation, which favored Japanese exporters.

(With inputs from agencies.)