The Dollar Rises as Traders Await Fed Chair Powell’s Speech
The dollar strengthened for the third consecutive day on Friday, while the euro continued to decline as traders anticipated a speech by U.S. Federal Reserve Chair Jerome Powell later in the day. However, the greenback’s gains were tempered by weak U.S. manufacturing data for November.
U.S. Manufacturing Sector Remains Weak
The Institute for Supply Management (ISM) reported that the U.S. manufacturing Purchasing Managers’ Index (PMI) remained unchanged at 46.7 in November, indicating contraction in the sector for the 13th straight month.
Rate Cut Expectations Increase
Following the release of manufacturing data, rate futures for the U.S. indicated a 56% chance of a rate cut by March 2020, compared to 43% the previous day. The chances of a rate cut in May also surged to 84%.
Inflation Data Supports Rate Cut Speculations
Weaker inflation data in both the United States and the euro zone further reinforced expectations that central banks might halt interest rate hikes and potentially implement cuts next year.
Fed Chair Powell’s Speech Holds Clues for Interest Rates
Investors are eagerly awaiting a speech by Fed Chair Jerome Powell later in the day to gain insights into future interest rate decisions in the U.S.
Currency Movements Remain Subdued
After significant volatility due to month-end trades, currency movements were relatively muted on Friday, with analysts noting smaller swings.
Dollar Strengthens, Euro and Yen Decline
The U.S. dollar index rose 0.2% to 103.69, recovering from its weakest monthly performance in a year. The euro declined by 0.4% to $1.0842, while the yen slipped 0.1% to 148.09 per dollar.
Bitcoin Continues to Rise
In the world of cryptocurrencies, bitcoin reached a new 18-month high of $38,839, representing a 1.9% increase from its previous value.
Hot Take: Uncertainty Surrounding Interest Rates
With the release of weak manufacturing data and increasing rate cut expectations, traders are eagerly awaiting Fed Chair Powell’s speech for clarity on the future path of interest rates in the U.S. The dollar strengthened against major counterparts, while the euro and yen declined. Bitcoin continued its upward trend in the cryptocurrency market.
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