The dollar rose on Thursday from its lowest level in three months, but was still on track to record its largest monthly decline in a year, as investors increased their bets that the Federal Reserve had finished raising interest rates ahead of the important inflation report scheduled for release later in the day.
While the euro fell after French consumer price data came in weaker than expected, after the data showed a slowdown in price growth in Germany and Spain, indicating downside risks to euro zone data, scheduled for release later in the day.
The dollar index, which measures the greenback against a basket of currencies, rose by 0.35% to 103.18, up from 102.46, which it recorded yesterday, Wednesday, which was the lowest level since August 11.
The index is still down by about 3.3% during the month of November, against the backdrop of expectations that the Federal Reserve will reduce interest rates in the first half of 2024.
Mohamed Al-Sarraf, exchange rate strategist at Danske Bank, said that the main drivers of the dollar’s decline in November were lower inflation data and signs of a slack labor market.
The analyst added that the idea of a soft landing for the economy has increased, and this is usually considered negative for the dollar.
Tomorrow, Friday, investors will await a speech by Jerome Powell, Chairman of the Federal Reserve, after Christopher Waller, a member of the Federal Reserve, hinted at the possibility of lowering interest rates in the coming months.
But before that, attention will turn to the Personal Consumption Expenditures Price Index, which is scheduled to be released today, Thursday, and is the Fed's preferred measure of inflation.