The U.S. dollar paused for breath on Thursday, stabilizing after a sharp upswing in the previous session. The move followed hawkish signals from the latest Federal Reserve meeting minutes, which tempered expectations for a potential rate cut in December.
At 04:45 ET (09:45 GMT), the Dollar Index — which measures the currency against six major peers — was little changed at 100.150, after jumping 0.7% overnight.
Dollar supported by Fed commentary
The minutes from the Fed’s October meeting revealed a divided committee, with “many” officials opposing a rate cut in December while “several” still viewed a cut as plausible.
The split underscored policy uncertainty and led traders to dial back bets on near-term easing.
Analysts at ING noted: “At the October meeting, several FOMC members were against the decision to cut rates, and many expected a hold in December. This confirms that Powell’s hawkish presser was representative of a good chunk of the Committee.”
A further complication for the December decision is the disruption to U.S. economic data releases following the government shutdown.
The September jobs report is due later today and is expected to show employment growth of around 50,000. However, the data is now considered outdated, making it less relevant for policymakers. The next key figures — the November jobs report and a limited October estimate — will not be released until December 16, several days after the Fed concludes its December 10 meeting.
As ING put it: “Our call so far has been that jobs data would justify a December cut, but the change in the data release schedule makes it a much harder call now.”
ING: Euro losses unlikely to persist
EUR/USD slipped 0.1% to 1.1525, after German producer prices fell slightly less than anticipated, dropping 1.8% year-on-year versus forecasts for a 1.9% decline.
According to ING: “We think EUR/USD can make brief explorations below 1.150, but for those to be sustainable, we’d need either a broader hawkish re-rating (due to strong US data) or some negative news affecting the euro.”
GBP/USD edged up 0.1% to 1.3074, though ING highlighted that sterling continues to trade with a “moderate risk premium” likely to persist until the U.K. government’s November 26 Budget.
The recent reversal of planned income-tax hikes has unsettled bond markets and added pressure on the pound.
Yen hits its weakest level in 10 months
In Asian trading, USD/JPY rose to 157.19, touching levels last seen in mid-January after jumping more than 1% overnight.
Bank of Japan Governor Kazuo Ueda met Wednesday with Finance Minister Satsuki Katayama and Economic and Fiscal Minister Minoru Kiuchi to discuss the economy.
Following the meeting, Katayama emphasized that “specific discussions around the exchange rate did not take place,” signaling continued caution regarding FX intervention.
USD/CNY climbed 0.1% to 7.1159 after China’s central bank kept its loan prime rate unchanged, in line with expectations.
AUD/USD hovered near flat at 0.6478 following a 0.5% decline on Wednesday.
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