The US dollar enjoyed its most extended period of weekly gains after the Federal Reserve communicated to end the monetary stimulus measures the coming year. The last time the dollar gained for such a longer period of time was during the Lyndon Johnson presidency.

The United States Dollar Index rose higher in its 10th consecutive week, its highest from March 1967, the time President Johnson was administering the country during his fourth year in administration. The yen dropped to its lowest level in six years as the Bank of Japan promised to maintain the stimulus to stop deflation. The euro slid to its weakest in the two year period as the ECB (European Central Bank) provided a loan program. Sterling increased this week for the first time in September as Scotland shunned independence.

Inexorable dollar rise

According to Neil Azous of Rareview Macro LLC, a research firm located in Connecticut, the dollar is the chosen one among the assets belonging to all classes going into the end of 2014. He said that traders will revert to trading the interest rate fundamentals once again.

The United States Dollar Index, the gauge used by Intercontinental Exchange Inc. to track the US dollar against currencies of the six American trading partners, rose 0.6 percent to touch 84.796 at day’s end. The gauge nudged 84.797, its peak from the time of July 2010. The currency gained 0.7 percent in the course of the week.

Exchange rate between the dollar and yen favored the former as the American currency rose 0.7 percent to reach 109.46 yen, the highest from August 2008, prior to trading at 109.04 yen, and increase of 0.3 percent. The dollar rose 1.6 percent during the week, with a gain of 0.7 percent to reach $1.2829 for each euro- the most robust from July 2013. The week saw an appreciation of one percent within the two currencies. The euro decreased 0.4 percent to touch 139.89 yen.

Other currencies

According to Douglas Borthwick of Chapdelaine & Co, a brokerage firm in New York, the events unfolding are the slow rise of the depressed dollar, similar to a coiled spring. He said the index will remain as long as Japan continues to make the motions of their quantitative easing and Europe continues to make increased noise concerning the expanse of their balance sheets.

The currency market saw a decline in volatility for the fourth day. The Global FX Volatility Index of JP Morgan Chase (NYSE: JPM) dipped to 7.29 percent, the minimum since September 8 on closing basis.