Due to poor investment performance, the dollar dropped versus a basket of key competitors in European trade on Friday, continuing its losses for the day and nearly recording a new weekly loss as markets began to factor in the possibility that the Federal Reserve might raise interest rates again next month.
Investors are anticipating a slew of significant US statistics for November that will assist assess the state of the US economy in 2024's fourth quarter.
The Index
The dollar index resumed losses yesterday, closing down 0.15% to 103.63, with a session high at 103.84. It was now closing in on three-month lows at 103.18.
Weekly Trading
As the Federal Reserve is expected to conclude its current cycle of policy tightening, the dollar index has dropped 0.25% this week, setting up a second weekly loss in a row.
Fed Minutes
The Federal Reserve's minutes from its November meeting indicated that policymakers will closely monitor the fight against inflation, with all members believing that interest rates should remain unchanged.
The minutes also revealed that policymakers are in agreement about the best course of action, which is to continue monitoring interest rates and that further policy tightening won't occur unless the progress with inflation is slowed down.
Data
Even if recent US statistics showed a significant decline in unemployment claims, the projected trajectory of US monetary policy remained unchanged.
According to a University of Michigan survey, US consumers' expectations for inflation increased in November for a second consecutive month, despite indications that prices haven't been declining recently.
US Exchange Rates
The US interest rate hike at the Federal Reserve meeting in December is priced with a 5% possibility by the markets.
Later today, significant US data on the manufacturing and services sectors for November will be released; these data will help determine the likely course of monetary policies going forward.
The US manufacturing PMI is predicted to decline slightly from 50.0 to 49.9 in November, and the services PMI is predicted to decline from 50.6 to 50.4.
