The dollar once more lost ground on Wednesday, following the publication of mixed US indicators and the minutes of the last meeting of the US central bank (Fed), which confirmed a possible deceleration of monetary tightening imminent.
Around 9:20 p.m. GMT, the greenback returned 0.90% to the single currency, at 1.0397 dollars for one euro. It fell even more sharply once morest the pound, the yen and the Swiss franc.
The British currency rose to $1.2081 on Wednesday, for the first time since mid-August, before Liz Truss’ brief stint as Prime Minister of the United Kingdom and the financial crisis that accompanied it.
According to the minutes of the last meeting of the Fed’s Monetary Policy Committee, at the beginning of November, a majority of its members considered that a slowdown in the rate of hikes in the key rate “would soon be appropriate”.
Among the reasons for this possible shift was the effect on the US economy of the rate hikes already made this year.
“This is not the + pivot + that the market expects, but it represents an important transition in terms of monetary policy”, reacted Quincy Krosby, of LPL Financial.
Traders expect a half-percentage-point hike in the Fed rate at its last meeting of the year in mid-December, which would take it to a range between 4.25% and 4 .50%.
Bond rates eased, depriving support of the “greenback”, one of the dollar’s nicknames. The yield on 10-year US government bonds fell to 3.69% from 3.75% the previous day.
Although U.S. central bankers acknowledged that the policy rate was likely to go higher late in the cycle than they expected in September, that report “wasn’t as aggressive as expected,” said commented Brad Bechtel, of Jefferies.
For him, this impression played once morest the dollar, as well as the macroeconomic indicators published at the start of the day.
Traders took particular note of the larger-than-expected rise in new weekly jobless claims as well as two PMI activity indicators, which showed a much sharper-than-expected contraction in both services and manufacturing in November. .
At the same time, the PMI composite index in the euro zone came out above expectations.
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