Anna 
In a subdued trading session influenced by the Thanksgiving holiday, the U.S. dollar experienced a decline in thin volumes on Friday, driven by uncertainties surrounding future U.S. interest rates. At 03:00 ET (08:00 GMT), the Dollar Index, measuring the greenback against a basket of six other currencies, dropped 0.3% to 103.555, just above the two-and-a-half month low of 103.17 recorded earlier in the week.
Despite the shorter U.S. trading session, a result of Thursday’s Thanksgiving holiday, the dollar index is poised for a monthly loss of approximately 2.5%, marking its weakest monthly performance in a year. This decline is attributed to mounting expectations that the Federal Reserve might initiate rate cuts in the coming year after concluding its rate-hiking cycle earlier this month.
While economic data is limited due to the holiday, key manufacturing and services PMI data for November could offer insights into the resilience of the U.S. economy. Analysts at ING noted that this data “has triggered a growing market impact but may fail to decisively steer the dollar in a low-volume day.”
In Europe, the EUR/USD pair rose 0.1% to 1.0909, buoyed by PMI data suggesting a potential shallower recession in Germany. Although the country’s economy contracted by 0.1% in the third quarter, in line with initial estimates, European Central Bank policymakers caution against interpreting the October rate pause as a precursor to imminent rate cuts.
GBP/USD saw a 0.2% increase to 1.2553, following Chancellor Jeremy Hunt’s growth-boosting measures ahead of next year’s election. ING noted that the announced tax cuts are perceived as sterling-positive, promoting both growth and inflation without unsettling the bond market.
In Asia, USD/JPY traded 0.1% lower at 149.50, with the yen benefiting from dollar weakness despite Japanese consumer inflation growing slightly less than expected in October. This, coupled with weak November PMI data, provides the Bank of Japan with leeway to maintain its ultra-dovish policy.
USD/CNY edged up by 0.1% to 7.1524, as the yuan heads for its fourth consecutive week of gains. Traders are now anticipating PMI readings from China next week, amidst ongoing concerns about a sluggish economic rebound that could challenge the yuan’s recovery from a year-low.
