The Dollar Remained Stable

The dollar held steady but was pinned near sixteen-week lows against a basket of major currencies and, in October, fueled investor hopes that interest rates would soon peak.

The dollar index compares the currency to six other currencies, including the yen and euro. It rose 0.191% to 104.840, but it was still close to Thursday’s low of 104.56, the lowest since August 11.

According to data released on Thursday, consumer spending in the United States has increased the fastest since January. The number of Americans submitting new claims for unemployment benefits decreased last week, indicating that the labor market is still robust.

The most recent indications of a robust economy in the US came after Federal Reserve Chair Jerome Powell declared on Wednesday that it was time to scale back rate increases. Powell observed that a good way to balance the risks at this point is to slow down.

In Carol Kong’s opinion, the data supports the market’s perception that the FOMC is nearing the end of its cycle of monetary tightening, which has weakened the value of the US dollar.

The Dollar Tumbles

The prospect of the Fed slowing its rate of monetary tightening has revived investor sentiment and sent the dollar tumbling after four consecutive 75 basis point hikes that fueled much of the greenback’s ascent this year.

Futures traders now expect the Fed’s benchmark rate to peak at 4.8711% in May, up from 3.831%. Before Powell’s comments on Wednesday, traders had priced in a 5% increase.

Meanwhile, the dollar was 0.05% lower at 135.2511 yen, having fallen as low as 135.045 yen earlier in the day — the lowest since August 18.

After gaining 1% overnight, the euro fell 0.1% to $1.0512, while the sterling last traded at $1.2237, down 0.13% on the day. The pound rose 1.7% overnight, reaching a five-month high of $1.2311.