SHANGHAI/SINGAPORE, Nov 13 (Reuters) - The dollar held near a 19-month high on Friday, set for its best weekly gain in two months, as bets on a larger rate hike drove US yields higher, pushing the Japanese yen back near the key 160 mark that has left traders on alert for intervention.
Treasury yields rose as President Donald Trump's comment that the US did not need a deal with Iran stoked worries about Middle East supply, lifting oil prices and, with them, inflation expectations. The move added to pressure
from data this week showing US inflation remained a concern, leaving traders weighing the chance of a larger-than-usual Federal Reserve rate hike next month.
Two-year Treasury yields have gained 34 basis points over the past two sessions, the sharpest two-day rise in 3-1/2 years. They were last at 4.8602%.
The euro edged up 0.1% to $1.1059, just above its lowest level against the dollar since April 2025. For the week, it was down 0.7%, on track for its largest weekly loss since late September.
Fed officials this week warned that US inflation remains stubbornly elevated, with some signalling openness to a 50-basis-point rate increase if price pressures fail to ease. Traders are pricing in a 14.5% chance of a large hike next month, up from 0% last week, the CME FedWatch tool showed.
Investors are also keeping an eye on upheaval in technology stocks in the wake of Nvidia CEO Jensen Huang's departure, in a sector already pressured by funding and regulatory concerns.
"If we do see a further sharp selloff in equity markets, that could be a negative for the US dollar," said Carol Kong, currency strategist at Commonwealth Bank of Australia.
"But I think there's a possibility it can continue its strong momentum in the near term, particularly with Fed officials speaking next week. If we see further support for a 50-basis-point hike, there's further upside in the dollar too."
The dollar index, which measures the greenback against a basket of currencies, was at 103.18, holding near its highest since April 2025. For the week, the dollar is set to gain 0.9%, the biggest weekly gain since September.
YEN INTERVENTION IN FOCUS
The yen was steady at 159.89 per dollar, hovering near its weakest since early September and fuelling concerns about possible intervention. The currency has weakened 0.9% this week, on track for its biggest weekly loss since September.
Japanese Finance Minister Satsuki Katayama said on Friday that the government will respond appropriately to currency volatility as the yen briefly hit the key 160-per-dollar line on Thursday.
Japan spent 15.4 trillion yen ($96.47 billion) to bolster its currency after it sank to a four-decade low of 163.99 per dollar in late July.
"Hawkish Fed repricing has widened the US rate advantage, for now outweighing support from expectations of further BOJ normalisation," MUFG analysts said in a note, adding that as the dollar nears 160 yen, the risk-reward from chasing the pair higher becomes less attractive.
The Australian dollar has fallen about 2.5% over the past month, making it the worst-performing G10 currency against the greenback and the only one where rate cuts are being priced in for next year. It was last at $0.6802. [AUD/]
The dollar was largely steady against the Swiss franc at 0.835, hovering near a one-month high.
Oil prices were mixed on Friday, but set for their second weekly decline. Brent futures were little changed at $95.79 a barrel. West Texas Intermediate declined 0.4%, to $88.38 a barrel.
Among cryptocurrencies, bitcoin fell 4% to $68,587, dropping below the key $70,000 level to its lowest since August. Ether also dropped more than 4% to $1,925.59.
(Reporting by Li Gu in Shanghai and Ankur Banerjee in Singapore; Editing by Sonali Paul and Sam Holmes)
