Weekly Roundup: US dollar slumps on Fed rate cut speculation
Currencies Direct November 27th 2023 - < 1 minute read
The US dollar fell back last week, mostly as a result of widespread speculation that the Federal Reserve will start to cut US interest rates in 2024.
At the start of the week the USD selling bias was reinforced by a risk-on market mood, amid hopes that China may introduce additional stimulus measures to help shore up its faltering economy.
The publication of the minutes from the Fed’s latest policy meeting offered a brief reprieve for the US dollar but were not enough to reverse the currency’s losses.
A surprisingly large drop in US jobless claims then lent support to USD in mid-week trade. Although the ‘greenback’ was unable to sustain these gains for long, as the closure of US markets for Thanksgiving resulted in thin trading conditions for the US dollar on Thursday.
The US dollar then closed the week on the defensive after a mixed US PMI print underpinned expectations the Fed’s next move will be an interest rate cut.
All eyes will be on the latest core PCE price index this week. If we see another fall in the Fed’s preferred indicator for inflation, this may reinforce rate cut bets and could lead the US dollar to test new multi-month lows.
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Currencies Direct