Dollar drifts near three-month low, focus on inflation data
rate hikes ahead of a crucial inflation report later in the day.
The dollar index, which measures U.S. currency against six rivals, eased 0.058% to 102.74, not far from 102.46 — its lowest since Aug. 10 it touched on Wednesday.
The index is down 3.7% in November on growing expectations the Fed will cut interest rates in the first half of 2024.
The dollar clawed back some of its losses on Wednesday after data showed the U.S.
economy grew faster in the third quarter than initially reported.
«I think it's still pretty much all about U.S. yields.
And by extension FOMC policy,» said Carol Kong, currency strategist at Commonwealth Bank of Australia.
«Markets will continue to play to focus on what FOMC officials say about the prospect of the upcoming rate-hike cycle.»
Investor focus will be on comments from Fed Chair Jerome Powell, who is due to speak on Friday in the wake Fed Governor Christopher Waller on Tuesday flagging a possible rate cut in the months ahead.
But before that, spotlight will be on Thursday's crucial personal consumption expenditure (PCE) inflation report.
Christopher Wong, currency strategist at OCBC, said the data will offer a glimpse into whether the disinflation trend seen so far remains intact. «If core PCE undershoots expectations to the downside, then USD may extend the move lower again.»
U.S.
financial conditions are the loosest since early September and have eased 100 basis points (bps) in a month, according to Goldman Sachs. The bank's global and emerging market indexes ticked up a bit last week, but financial conditions are also looser by around 100 bps from a month ago.
U.S. rates futures markets are now pricing in more than 100 basis points of rate cuts next year starting in May, and
