Weekly Roundup: US dollar slumps as Fed prepares for policy slowdown

Amy Richards December 5th 2022 - < 1 minute read

The US dollar slipped before rebounding at the start of last week, as an increasing aversion to risk eventually boosted the appeal of the safe-haven ‘greenback’.

Risk sentiment wavered through Tuesday, causing more mixed movement in the US dollar.

Wednesday, however, was the turning point. After strengthening ahead of a speech from Fed Chair Jerome Powell, USD then slumped after the central bank chief signalled a smaller interest rate rise at the Fed’s next meeting.

The following day, easing US inflation and a contraction in the US manufacturing PMI added to the American dollar’s downside.

Upbeat data on Friday failed to help USD recover. Although the non-farms payrolls report beat forecasts and wage growth unexpectedly rose, the ‘greenback’ was unable to hold on to the subsequent gains.

This week, however, an unexpected rise in the ISM services PMI has seen the US dollar jump.

Risk appetite could drive USD through the remainder of this week’s trade, with a downbeat mood likely to support the US dollar.

High-impact data on Friday may see the week end with a bang. If the US PPI eased again in November and consumer sentiment remains weak, the ‘greenback’ could fall further.

Written by
Amy Richards

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