Dollar edges higher but set for weekly loss; Fed's Williams in spotlight
Investing.com — The U.S. dollar edged higher in early European trade Friday, but remained on course for its steepest weekly decline since July after the Federal Reserve signaled rate cuts next year while central banks in Europe stuck to their hawkish paths.
At 04:15 ET (09:15 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% higher at 101.702, not far from the four-month low of 101.459 seen earlier Friday.
The index is down over 2% this week so far.
Both the European Central Bank and the Bank of England expressed their desire to keep policy tight well into next year to combat inflation, as they kept interest rates unchanged on Thursday.
The ECB said policy easing was not even brought up in a two-day meeting, the BOE said rates would remain high for «an extended period.»
This contrasted with the Fed's pivot towards rate cuts, and means that the dollar will remain out of favor as the year comes to an end.
“As the dust settles after a furious period for central bank meetings we are left to conclude that European policymakers have chosen to push back more than the Fed when it comes to what the market prices for 2024 rate cuts,” said analysts at ING, in a note.
There’s more U.S. economic data to digest later in the session, including November industrial and manufacturing production as well as S&P PMI numbers, but most focus will be on a speech by Fed policymaker John Williams, as the market looks for confirmation that the debate has moved on to the timing of the first rate cut.
“Should Williams mention rate cuts, we suspect the dollar will stay on the soft side today,” ING added.
EUR/USD fell 0.3% to 1.0953, just below 1.1009, a two-week high it touched on Thursday,
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