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Dollar heads for strongest week since September

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Pound sags after data shows UK economy slowed

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Trump plans on taxes, tariffs hit trade partner currencies

(Updates prices throughout, recasts headline, first paragraph,

adds new analyst comment)

By Chibuike Oguh and Amanda Cooper

NEW YORK/LONDON, Nov 15 (Reuters) - The U.S. dollar was

set for its biggest weekly gain in over a month on Friday, as

markets reassessed expectations of future interest rate cuts and

with the view that President-elect Donald Trump's policies could

stoke inflation.

The dollar has benefited from market expectation that Trump

administration policies, including tariffs and tax cuts, could

stoke inflation, leaving the Federal Reserve less room to cut

interest rates.

Fed Chairman Jerome Powell said on Thursday the U.S. central

bank did not need to rush to lower interest rates, prompting

traders to axe their more aggressive bets on a rate cut next

month and beyond.

The greenback was set to notch a weekly gain against the

Japanese yen after it traded above 156 yen this week

for the first time since July. It was last down 0.9% to 154.94

per dollar.

The euro was headed for the second straight week

of losses after slumping to its lowest level since October 2023.

It was flat at $1.053050.

"Today is really just an ahead-of-weekend consolidation; we

haven't taken out any key levels like 106 in the euro like 127

in sterling," said Marc Chandler, chief market strategist at

Bannockburn Global Forex in New York.

"The market overreacted to Powell yesterday, but U.S.

interest rates are still firm. So whatever forces were unleashed

by the U.S. election, they haven't been exhausted yet."

Commerce Department data on Friday showed that U.S. retail

sales increased slightly more than expected in October, but

underlying momentum in consumer spending appeared to slow at the

start of the fourth quarter.

Boston Fed president Susan Collins in comments published

Friday in the Wall Street Journal also said rate cuts could be

paused as soon as the Dec. 17-18 meeting, depending on upcoming

data on jobs and inflation. The probability of a December cut

has dropped to around 57% from closer to 82% a day ago,

according to CME's FedWatch tool.

Sterling was on track for its steepest weekly fall

since January 2023, at roughly 2%. It was last down at $1.26290.

The pound showed little reaction to data showing Britain's

economy contracted unexpectedly in September and growth slowed

to a crawl over the third quarter.

The dollar is trading around a one-year high against a

basket of currencies at 106.81, having risen nearly 1.73%

this week, set for its best performance since September. It was

last down 0.13% at 106.74

In cryptocurrencies, bitcoin traded just below

$90,000, as some investors took profits after a stellar run.

Bitcoin fell 0.25% to $88,091.00. Ethereum

declined 2.99% to $3,025.61.