FOREX-US dollar gains but set for worst monthly loss in a year, euro falls

NEW YORK, Nov 30 (Reuters) – The dollar gained on Thursday as investors took profits on bets the currency would weaken further and shrugged off data showing signs the U.S. economy is slowing.

Thursday’s economic data suggested that the Federal Reserve is likely done raising interest rates and may start easing by the middle of next year, typically a dollar-negative factor.

Euro weakness after a soft euro zone inflation report also partly helped boost the greenback, analysts said.

The dollar index, which measures its value against six major currencies, rose 0.6% to 103.38 =USD and was on track to post its best daily gain in more than a month. On a monthly basis, the dollar has posted a 3% loss, on pace for its worst monthly showing in a year.

Some analysts said the dollar may have benefited from month-end demand, as investors squared up positions for November, a period that featured a sharp sell-off in the U.S. currency with the market pricing in rate cuts next year.

Others, however, expected a dollar sell-off at month-end with stocks’ sharp gains for November. There were sell dollar signals at some of the biggest U.S. banks, analysts said.

“We were expecting dollar selling at month-end given how much U.S. equities rallied. That typically means foreign asset managers would have sold dollars forward,” said Vassili Serebriakov, FX strategist, at UBS in New York.

“But it’s possible that some of the selling happened earlier in the month. So maybe there’s less dollar selling at month end.”

Dollar gains persisted despite reports that showed U.S. inflation continued to moderate in October and jobless claims rose in the latest week suggesting a slowing labor market.

Inflation as measured by the personal consumption expenditures (PCE) price index was unchanged in October after climbing 0.4% in September. In the 12 months through October, the PCE price index increased 3.0%. That was the smallest year-on-year gain since March 2021 and followed a 3.4% advance in September.

Meanwhile, initial claims for state unemployment benefits increased 7,000 to a seasonally-adjusted 218,000 for the week ended Nov. 25. Economists had forecast 226,000 claims.

In other currencies, the euro fell after euro zone inflation eased by more than forecast this month, fuelling bets of early European Central Bank rate cuts.

Consumer price growth in the 20 countries that share the euro currency dropped to 2.4% in November from 2.9% in October, well below expectations for a fall to 2.7%.

The euro last changed hands at $1.0889 against the dollar, down 0.7% EUR=EBS. It is still poised to show a monthly gain of 3%, the largest since November 2022.

Against the yen, the dollar rose 0.7% to 148.20 yen JPY=EBS. For November, the greenback was down 2.3%, on pace for its largest monthly fall since December last year.

“The broader picture is that the dollar has weakened quite substantially in November. It’s still probably a two-way risk from here in terms of the Fed December meeting,” Serebriakov of UBS said.

“The U.S. data hasn’t slowed significantly. Inflation has but activity data remains relatively resilient,” he added.

U.S. rate futures have priced in about a 47% chance of a rate cut at the March 19-20, 2024 meeting, rising to about 78% probability at the April 30-May 1 meeting, the CME FedWatch Tool showed on Thursday. Overall, the rates market sees roughly 100 basis points (bps) of cuts by the end of 2024, according to LSEG data.

========================================================

Currency bid prices at 4:30PM (2130 GMT)

Description

RIC

Last

U.S. Close Previous Session

Pct Change

YTD Pct Change

High Bid

Low Bid

Dollar index

=USD

103.4800

102.8200

+0.66%

-0.010%

+103.5900

+102.7100

Euro/Dollar

EUR=EBS

$1.0887

$1.0969

-0.75%

+1.61%

+$1.0984

+$1.0879

Dollar/Yen

JPY=EBS

148.1800

147.2400

+0.64%

+13.02%

+148.5000

+146.8500

Euro/Yen

EURJPY=

161.34

161.51

-0.11%

+15.00%

+161.9400

+160.6000

Dollar/Swiss

CHF=EBS

0.8753

0.8737

+0.19%

-5.33%

+0.8770

+0.8681

Sterling/Dollar

GBP=D3

$1.2625

$1.2695

-0.55%

+4.40%

+$1.2710

+$1.2604

Dollar/Canadian

CAD=D3

1.3564

1.3589

-0.18%

+0.11%

+1.3626

+1.3553

Aussie/Dollar

AUD=D3

$0.6607

$0.6617

-0.14%

-3.07%

+$0.6650

+$0.6571

Euro/Swiss

EURCHF=

0.9529

0.9585

-0.58%

-3.70%

+0.9590

+0.9474

Euro/Sterling

EURGBP=

0.8621

0.8640

-0.22%

-2.52%

+0.8649

+0.8615

NZ Dollar/Dollar

NZD=D3

$0.6155

$0.6156

+0.00%

-3.05%

+$0.6182

+$0.6123

Dollar/Norway

NOK=D3

10.8050

10.6310

+1.84%

+10.32%

+10.8240

+10.6690

Euro/Norway

EURNOK=

11.7625

11.6879

+0.64%

+12.09%

+11.7848

+11.6717

Dollar/Sweden

SEK=

10.4919

10.3624

+0.59%

+0.81%

+10.5397

+10.3450

Euro/Sweden

EURSEK=

11.4228

11.3560

+0.59%

+2.45%

+11.4840

+11.3576

Leave a Reply

Your email address will not be published. Required fields are marked *