Anna 
In subdued holiday-affected trading on Thursday, the U.S. dollar faced a retreat as market participants digested recent economic indicators and contemplated their implications for the Federal Reserve’s stance on interest rates.
At 03:00 ET (08:00 GMT), the Dollar Index, gauging the greenback against a basket of six other currencies, slipped 0.3% to 103.510, hovering just above the 2-1/2-month low recorded earlier this week at 103.17.
The dollar had experienced a marginal uptick on Wednesday following optimistic weekly jobless claims data, indicating a larger-than-anticipated decrease in new claims and reinforcing the perception of a robust labor market. However, this positive momentum was counteracted by data revealing a larger-than-expected decline in orders for long-lasting U.S. manufactured goods in October, dampening the overall sentiment.
Despite the brief boost, the positive tone in the dollar’s performance has not endured, especially as trading volumes remain constrained due to holidays in both Japan and the U.S., the latter celebrating Thanksgiving.
Analysts at ING noted, “Part of the rebound in the dollar observed over the past two sessions … may well be related to some profit-taking on risk-on trades and more defensive positioning ahead of Thanksgiving.”
Having depreciated approximately 2.5% throughout November, the dollar is on track for its most significant monthly decline in a year. Market expectations anticipate the Federal Reserve to maintain rates in December before considering cuts in the upcoming year.
In the European market, EUR/USD saw a 0.3% increase to 1.0922, preceding the release of minutes from the European Central Bank’s October policy meeting, where the ECB halted a streak of 10 consecutive rate hikes. Positive business activity data for November from Germany, the eurozone’s dominant economy, contributed to the euro’s gains despite French business activity contracting.
GBP/USD experienced a 0.2% rise to 1.2521, with the pound recovering slightly after Chancellor Jeremy Hunt’s Autumn Statement. While Hunt introduced measures to stimulate growth, concerns lingered over a forecast of sluggish economic growth.
In the Asian market, USD/JPY traded 0.2% lower at 149.17, with the yen rebounding from overnight losses as the dollar retraced. Attention is now focused on Friday’s consumer inflation data for October, offering insights into the Bank of Japan’s plans for its monetary policy.
AUD/USD rose 0.4% to 0.6567, driven by Reserve Bank Governor Michele Bullock’s warning on stubborn inflation, potentially paving the way for more interest rate hikes in the coming months.
USD/CNY fell 0.2% to 7.1377, with anticipation building for Chinese purchasing managers index data for November next week, providing crucial cues on the economy following a series of weak readings in October.
