Anna 
In the midst of a resurgence in U.S. equities following a sell-off, the dollar experienced a one-week low against a basket of major currencies on Thursday. Investors are closely monitoring Friday’s U.S. inflation data, seeking insights into the potential trajectory of future Federal Reserve policy.
Recent data revealed that gross domestic product (GDP) for the last quarter increased at a revised 4.9% annualized rate, slightly lower than the previously reported 5.2%. Notably, the consumer spending component of third-quarter GDP saw a downward revision from 3.6% to 3.1%.
Marc Chandler, Chief Market Strategist at Bannockburn Global Forex in New York, commented on the GDP figures, stating, “The GDP number wasn’t very helpful. We had a little bit less growth than we thought.” Despite this, Chandler emphasized that the market’s anticipation of rate cuts in the coming year remained strong, contributing to the dollar’s overall soft performance.
The U.S. currency had strengthened on Wednesday in a safe-haven bid following a sudden afternoon sell-off in U.S. stocks. The Federal Reserve had kept interest rates steady the previous week, signaling an end to the historic two-year monetary policy tightening, with lower borrowing costs anticipated in 2024.
A separate report on Thursday indicated a marginal increase in Americans filing new claims for unemployment benefits, suggesting underlying economic strength as the year concludes.
Investors are now eagerly awaiting Friday’s release of the U.S. core personal consumption expenditure (PCE) index. A potential November rise of 0.1% could slow the six-month annualized pace of inflation to 2.1%, nearing the Fed’s 2% target.
Anticipating slower inflation, some investors are betting on early and aggressive Fed action to prevent real rates from rising. The dollar experienced a 0.93% decline against the Japanese yen, while the yen, down roughly 8% against the dollar for the year, saw a slight economic growth projection increase by Japan’s government.
Sterling rebounded 0.4% against the dollar on Thursday after a significant drop, prompted by British inflation falling below forecasts to an annual 3.9% in October, a two-year low. Traders are pricing in Bank of England rate cuts as early as May.
The dollar index, tracking the U.S. currency against six peers, was down 0.596% at 101.8, reaching its lowest level in a week. Analysts speculate that month-end rebalancing in thin trade could exert near-term pressure on the dollar.
In the foreign exchange market, the risk-sensitive Australian and New Zealand dollars traded higher, with the Aussie up 1.04% at $0.68005, and the kiwi up 0.74% at $0.6294.
Bitcoin demonstrated a 0.29% increase, reaching $43,791. Investors continue to navigate a dynamic economic landscape marked by currency movements and anticipation of central bank actions.
