Dollar Caps Worst Week Since August on Fed Bets, Bank Woes

A Bloomberg gauge of the dollar closed out its worst week in more than two months as expectations of Federal Reserve interest-rate cuts coupled with emerging credit risks in the US banking sector weighed on the greenback.

The Bloomberg Dollar Spot Index was little changed in New York trading on Friday but declined some 0.5% from Monday’s open, the largest weekly drop since early August. Policy-sensitive two-year Treasury yields traded near a three-year low, while traders boosted their bets on Fed easing and are now pricing some 50 basis points of rate reductions by December versus 46 basis points on Wednesday.