Dollar set for longest run of gains in a year amid haven demand

The dollar is set for its longest run of weekly gains in more than a year, as escalating geopolitical tensions boost demand for the haven currency.

The Bloomberg Dollar Spot Index climbed as much as 0.7% on Friday to the highest level in two years. The gauge is set for an eighth week of gains, the most prolonged rally since September 2023.

The latest moves came as investors rushed for safe assets amid concern about an escalation in Russia’s war in Ukraine. That compounded a dollar rally that’s been in place since early October, on the view Donald Trump’s potential global tariffs and tax cuts will fan inflation and boost the US economy.

The dollar was benefiting from a “perfect storm of the news which keeps getting better and better from the U.S. side of the equation,” said Michael Brown, senior research strategist at Pepperstone Group in a Bloomberg TV interview.

The greenback’s strength on Friday helped send the euro to the lowest level since 2022. The common currency was also dragged lower by data showing euro-area business activity unexpectedly shrank in November, which led traders to ramp up bets on interest-rate cuts from the European Central Bank.

Solid readings of U.S. manufacturing PMI and consumer sentiment due later in the day may reinforce the view of a buoyant US economy and add to market expectations that the dollar will keep edging higher. A growing number of strategists see a risk the greenback will reach parity versus the euro.

The dollar’s surge came along with gains in US Treasuries that moved yields further away from recent highs. The 10-year yield fell three basis points to 4.39% after reaching 4.5% last week.