Apr 4 2024: The dollar reached a one-week low on Thursday as recent economic data reinforced expectations for swift rate cuts in the U.S., while the yen, despite being battered, remained relatively unchanged against other major currencies.
Key Points:
Dollar’s Performance: The dollar, although the best-performing G10 currency for the year so far, hit a one-week low due to an unexpected slowdown in U.S. services growth and expectations of quick rate cuts.
Rate Cut Expectations: Federal Reserve officials, including Jerome Powell, emphasized the need for more debate and data before cutting interest rates, which markets anticipate happening in June.
Dollar Index: The U.S. dollar index, measuring the currency against six rivals, was down 0.1% at 104.14, reflecting a 2.8% increase this year despite reduced expectations for rate cuts.
Focus on Labor Data: The focus for the rest of the week will be on U.S. labor data due on Friday, with futures pricing indicating about a 60% probability of a Fed cut in June.
Yen’s Position: The yen, near its 34-year low against the greenback, remained almost flat at 151.68 versus the dollar, supported by the threat of official intervention.
Euro and Swiss Franc: The euro edged up, while the Swiss franc dropped against the euro and the dollar following softer-than-expected European inflation data and expectations of rate cuts.
Australian and New Zealand Dollars: The Australian and New Zealand dollars gained traction, with traders expecting rate cuts in New Zealand but rates on hold in Australia until November.
Sterling and Chinese Markets: Sterling and Chinese markets remained relatively stable, with the New Zealand dollar showing strength above $0.60.
Overall, the currency markets are influenced by expectations regarding interest rates, economic data releases, and geopolitical factors, shaping trading patterns and currency performances.
