The US dollar has fallen to a 15-month low against a basket of currencies as traders await policy decisions and economic data. The euro, on the other hand, continues to climb, hitting a fresh 16-month high. Market participants are closely monitoring the upcoming policy decisions of the Federal Reserve and the European Central Bank, which are both expected to announce rate hikes soon.
Last week, the US dollar experienced its biggest weekly drop of the year after US inflation data indicated that the Federal Reserve may be close to the end of its rate hike cycle. The dollar index fell 2.25% for the week, its largest decline since November 2022. The recent slowdown in US producer prices and consumer inflation has further supported the belief that the Fed may halt rate increases next year.
Meanwhile, Chinese growth data was released, slightly surpassing low expectations. However, the currency market showed limited response as traders had already factored in a sluggish quarter. The Chinese government’s steps to promote spending and stimulate the economy remain to be seen.
The Australian and New Zealand dollars have pulled back after recent gains. Both currencies have weakened against the US dollar, with the Australian dollar down 0.34% and the New Zealand dollar down 0.4%. The currencies had reached their peaks last week but have since retreated.
The Japanese yen’s sharp gains have slowed as speculation grows about the Bank of Japan’s policy meeting next week. It is unclear if the central bank will make any shifts in its ultra-dovish stance.
The Swedish and Norwegian crowns continued to rise against the US dollar after significant gains last week. The Swedish crown rose 0.65%, while the Norwegian crown increased by 0.4%.
The British pound remains near a 15-month peak, trading just below last week’s high. Market participants are closely watching for any developments regarding Brexit negotiations and their impact on the pound.
In conclusion, the US dollar has remained weak, reaching a 15-month low against a basket of currencies. Traders are eagerly awaiting policy decisions and economic data to determine the future movement of major currencies. The upcoming rate hikes by the Federal Reserve and the European Central Bank are also being closely monitored. The market remains uncertain about the trajectory of the US dollar and whether it has reached oversold territory.
