Investing.com – The US dollar fell slightly on Thursday on growing expectations of another Federal Reserve rate cut next week, while the euro edged higher ahead of the European Central Bank’s latest policy meeting.
At 04:50 ET (09:50 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading 0.1% lower at 106.245.
Fed likely to cut next week
The latest US data came in largely as expected on Wednesday, and although more inflation data will emerge later in the session, in the form of November, expectations of a Federal Reserve rate cut next week have strengthened.
“There were no real surprises in yesterday’s CPI data and the market has confirmed its view that the Fed could cut by 25 basis points next week. This move will be characterized by the Fed seizing the opportunity to implement less restrictive policies while it still can,” ING analysts said in a note.
Since September, the country has cut rates by 75 basis points and markets are currently expecting another 25 basis point cut at the December 17-18 meeting.
Euro awaits ECB decision; CHF falls after sharp cut
Much of the attention is on the European market today, up 0.2% to 1.0516 ahead of Thursday’s policy-setting meeting of the European Central Bank, the last policy meeting of the year.
The country is widely expected to agree to another 25 basis point rate cut, the fourth cut this year, as the central bank grapples with a eurozone economy at risk of recession and faces political instability at home country and the prospect of a new trade transaction. war with the United States.
In addition to this decision, the ECB will unveil its latest quarterly forecasts on growth and inflation.
“We think there could be a downward revision to growth and perhaps even inflation forecasts today,” ING said. “The ECB’s market prices are already ensuring that interest rates will be reduced in an accommodative area (below 2%) next summer. But that pricing could be even lower. Overall, we remain bearish on the EUR/USD and see no reason for an aggressive response from the ECB to current market prices.”
traded 0.1% higher at 1.2761, while rising 0.2% to 0.8857 after interest rates were cut by 50 basis points in a bid to contain the Swiss franc’s appreciation.
This marks the sharpest fall in financing costs since the abrupt emergency rate cut by the SNB in January 2015, which was implemented when the bank abandoned its minimum exchange rate against the euro.
Chinese Yuan Looks Forward to CEWC Meeting
In Asia, yields rose 0.1% to 7.2675, focusing on the Chinese Central Economic Work Conference (CEWC), a two-day meeting that will conclude later on Thursday.
The CEWC is a crucial event as it discusses how China will address internal challenges such as slowing growth, weak consumption and external pressures such as trade tensions.
Top Chinese leaders and policymakers are considering the possibility of devaluing the yuan in 2025 in anticipation of higher US trade tariffs when Donald Trump returns to the White House next month, Reuters reported.
rose 0.1% to 152.50, while it rose 0.7% to 0.6513 after data showed the country’s November gain was stronger than expected while it fell unexpectedly.
