Weekly Roundup: US dollar hits multi-month lows on Fed rate cut bets
Currencies Direct December 18th 2023 - < 1 minute read
After wobbling at the beginning of last week’s session, the US dollar then rebounded as the latest American CPI showed signs of sticky inflation.
USD exchange rates then plunged to multi-month lows in the wake of the Federal Reserve interest rate decision on Wednesday evening.
The Fed’s rate projections pointed to multiple rate cuts in 2024, while Fed Chair Jerome Powell struck a dovish tone in the following press conference. This fuelled bets on a March rate cut from the US central bank, sending USD spiralling.
The ‘greenback’ was able to recoup some losses on Friday as Fed rate-setter John Williams sought to push back on market speculation following the bank’s dovish decision. However, USD still remained sharply lower on the week.
The spotlight this week falls on the US core PCE price index – the Fed’s preferred gauge of inflation. While an anticipated cooldown could dent USD, any signs of sticky inflation may lift the American currency.
In the meantime, risk appetite could drive the safe-haven US dollar’s movement. Could a cautious mood see USD firm?
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Currencies Direct