DOLLAR INDEX CRACKS TO FOUR MONTH LOW ON RISING PROSPECTS OF FED RATE CUT NEXT YEAR

Published on Dec 14, 2023 10:58

The dollar index dived sharply to its lowest level in four months following dovish FOMC policy outcome and is now trading at 102.15, down 0.32% on the day. The greenback witnessed heavy sell off, dragged down by a sharp decline in US treasury yields to under 4%, its lowest level since August amid dovish signals from Fed�s Committee overnight. Fed announced its widely expected decision to leave interest rates unchanged while also indicating a possible rate cut next year through its dot chart. The committee member�s jotted in at least three rate cuts in 2024. However, the Federal report stated that inflation has eased over the past year but remains elevated and the Committee remains highly attentive to inflation risks. Meanwhile, the Labor Department released a report Wednesday showing producer prices in the U.S. unexpectedly came in flat during the month of November. The report also said the annual rate of producer price growth slowed to 0.9 percent in November from 1.2 percent in October. Among the basket currencies, GBPUSD and EURUSD are quoting up by around 0.8% on the day at $1.2637 and $1.0898 respectively.