Holiday thins trading after data nudges dollar higher
markets were lulled by holidays in Japan and the United States on Thursday, leaving the U.S. dollar revelling in its gains after data that cast doubts over market projections for peak Fed rates.
With markets shut in Japan and the United States for the Thanksgiving holiday, currencies barely moved and cash U.S.
Treasuries weren't traded in Asia.
The dollar index rose overnight, bouncing from a 2-1/2 month low, after economic data showed the number of Americans filing new claims for unemployment benefits fell more than expected last week.
At the same time, orders for long-lasting U.S.
manufactured goods fell more than expected in October, signalling an economy cooling considerably after hot third-quarter growth.
In another worrying indicator for the Federal Reserve, a survey from the University of Michigan showed consumers this month anticipate higher inflation both in the near and long term, particularly inflation over the next five years.
«The dollar has partially rebounded after recent weakness...markets are reminded from the University of Michigan survey that inflation expectations for the next 1 and 5 years stay sticky, and that rates could stay higher for longer,» said Jeff Ng, head of Asia macro strategy at Sumitomo Mitsui Banking Corporation.
The dollar's rebound comes after a three-week long spell of weakness driven by evidence of a slowing economy and disinflation, leading markets to price out any additional Fed rate hikes.
U.S. Treasuries had rallied too, with 10-year Treasury yields down nearly half a percentage point this month.
Markets have dialled back expectations of Fed rate cuts in 2024, with futures now showing a 27% chance that the Fed cuts its target rate at the March 2024 policy meeting, a
