In the wake of the U.S. Federal Reserve’s dovish pivot, the U.S. dollar suffered substantial losses on Thursday as investors steered clear of momentum growth stocks. The dollar index, which measures the greenback against six major peers, was down 0.88 percent to 101.9642 in late trading, reaching its lowest position since August.
Following the Federal Reserve’s interest-rate projections and policy update, the U.S. Treasury yields slid to fresh multi-month lows on Thursday, with the 10-year rate dropping to as low as 3.91 percent. Investors and traders continued to digest the implications of these developments.
Contrary to expectations, U.S. retail sales unexpectedly rose 0.3 percent in November, marking a brisk start to the holiday shopping season and assuaging concerns of an imminent recession, according to the U.S. Commerce Department. “The rebound in retail sales in November provides further illustration that the continued rapid decline in inflation is not coming at the cost of significantly weaker economic growth,” said Andrew Hunter, deputy chief U.S. economist at Capital Economics.
The CME FedWatch Tool projections indicate that markets anticipate rate cuts as early as March 2024.
Meanwhile, the European Central Bank and Bank of England both opted to maintain their main interest rates unchanged on Thursday, while also signaling that cuts are not immediate. In late New York trading, the euro rose to 1.0991 dollars from 1.0886 dollars in the previous session, and the British pound increased to 1.2755 dollars from 1.2621 dollars in the previous session.
The U.S. dollar saw declines against various other currencies as well, with 141.9480 Japanese yen, 0.8662 Swiss francs, and 1.3409 Canadian dollars, as well as 10.2349 Swedish kronor. These movements reflect a significant shift in the currency market.
