On Thursday, the U.S. dollar experienced significant losses due to dovish bets on the Federal Reserve and falling U.S. bond yields following the decision made on Wednesday.
In late trading, the dollar index, which measures the greenback against six major peers, dropped by 0.71 percent to 106.1285.
While Fed Chair Jerome Powell did not rule out another rate hike, investors are increasingly convinced that the peak in U.S. interest rates has already been reached. Fed funds futures indicate less than a 20 percent chance of rates rising in December.
Brad Bechtel, global head of FX, believes that the Fed is likely done with rate hikes, but acknowledges that tightening once more could still be justified given the resilient U.S. economy.
“However, there is a slowdown underway and inflation is moving in the right direction,” Bechtel said. “Debating whether they will raise another 25 basis points or not is not relevant. The bigger picture is that the Fed is essentially at its peak.”
In addition, the United States’ unemployment claims rose by 5,000 to 217,000 for the week ending Oct. 28, as reported by the Labor Department on Thursday. The four-week moving average of claims increased by 2,000 to 210,000.
The British pound strengthened after the Bank of England decided to maintain rates at a 15-year high and emphasized that it has no intention to cut rates in the near future.
At the end of New York trading, the British pound rose to 1.2204 U.S. dollars from 1.2132 U.S. dollars, while the euro increased to 1.0625 U.S. dollars from 1.0542 U.S. dollars.
The U.S. dollar’s value against the Japanese yen decreased from 150.9820 to 150.4220 in the previous session. It also fell from 0.9088 Swiss francs to 0.9059 Swiss francs, and dropped from 1.3873 Canadian dollars to 1.3751 Canadian dollars. The U.S. dollar declined from 11.2053 Swedish krona to 11.1124 Swedish krona.
