The US dollar experienced a significant drop as of Thursday’s data, recording its biggest loss in five months. This caused investors to lower their current expectations for further interest rate hikes in 2018, after the Fed’s latest meeting.
Another reason for the dollar’s drop is that low returnsr currencies such as the Japanese yen and the Swiss franc have been growing, especially as Chinese stocks fell by 2-3% in Asian markets, so investors have stopped buying or selling positions during especially in the Japan holiday seasons.
In a time when US interest rates are likely to rise significantly in December, markets fear a drop in the interest rate expectations for next year, according to hints given by Federal Reserve officials. The latest meeting of the Fed also highlighted concern among its members about inflation expectations, as the Council is expected to focus on low inflation instead of growth.
The US Dollar Index, which is based on comparing the strength of 6 major currencies, was down by 0.12% to 93.04. The dollar traded at a two-month low record against the yen, with the dollar dropping to 111.24 yen per dollar after reaching its lowest point yesterday, at 111.07 yen.
The EUR/USD pair rose by 0.21%, reaching $1.1845, approaching last week’s one-month high of $1.1859. European economic data showed a fast-paced growth amongst the private economic sectors, as companies recorded an increase in production and employment.
The minutes of the ECB meeting last October showed that economic policy makers agreed to extend the duration of the asset purchase program.
Meanwhile, the UK economy grew by 0.4% in Q3, with the GBP/USD pair reaching $1.3355 per sterling pound.
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