The dollar had the longest rally since teenagers bought Beatles albums and Lyndon Johnson was president as the Federal Reserve signaled interest rates will rise next year while other central banks pushed stimulus plans.
The U.S. Dollar Index rose for a 10th consecutive week, the longest since at least March 1967. Sterling rose after Scotland rejected independence, reviving bets the Bank of England will join the Fed in raising rates. The yen fell versus all of its 16 major peers as the Bank of Japan pledged to maintain stimulus to fight deflation, while the European Central Bank debuted a loan program. A report next week may revise second-quarter U.S. economic growth higher.
“The Fed and the BOE are the two central banks that’ll start hiking rates next year, and we like being long dollar and sterling,” said Athanasios Vamvakidis, head of Group of 10 foreign-exchange strategy at Bank of America Merrill Lynch in London. “There’s more room for investors to accumulate long positions on the dollar.” Long positions are bets a currency will gain.
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