Greenback Wobbles On Powell's Pivot
London: 14 December 2023 (TraderMade): The US Dollar (USD) nursed its wounds on Thursday after a bruising Wednesday courtesy of the Federal Reserve (Fed). Dovish signals from the central bank and a dovish dot plot sent yields plummeting, dragging the USD lower.
Key Highlights
Fed holds rates, hints at future cuts
With rates unchanged at 5.25%-5.5%, Powell's dovish comments about potential 2024 cuts sparked a bond rally and weighed on the USD.
Yields plummet, USD stumbles
The 10-year US Treasury yield plunged below 4%, its lowest since August, further weakening the greenback.
USD broadly lower
EURUSD popped above 1.0900 (At 1.09003 at about 07:14 AM GMT), GBPUSD gained 50 pips (Currently at 1.26402), and AUDUSD surged to its July high on upbeat Aussie data (Currently at 0.67127).
USDJPY tumbles
The USDJPY pair nosedived below 142.00, continuing its descent (Currently at 141.827).
Central banks in focus
The Bank of England (BoE) and European Central Bank (ECB) loom large, with their policy decisions potentially impacting the USD's trajectory.
Looking Ahead
ECB and BoE decisions
Both central banks are expected to stand pat on rates, but market participants will scrutinize updated economic projections.
US data
Initial jobless claims and retail sales data could influence the USD's near-term direction.
In a nutshell, the USD's recent woes are far from over. Powell's dovish pivot has thrown a wrench into the greenback's machinery, and central bank decisions across the pond could further dictate its fate.
