© Reuters. FILE PHOTO: A New Zealand dollar coin sits atop a United States one dollar bill in this photo illustration taken on March 11, 2016. REUTERS/David Gray/Illustration/File Photo

By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) -The dollar gained on Thursday as investors took profits on bets the currency would weaken further and shrugged off data showing signs the U.S. economy is slowing.

Thursday’s economic data suggested that the Federal Reserve is likely done raising interest rates and may start easing by the middle of next year, typically a dollar-negative factor.

Euro weakness after a soft euro zone inflation report also partly helped boost the greenback, analysts said.

The , which measures its value against six major currencies, rose 0.6% to 103.38 and was on track to post its best daily gain in more than a month. On a monthly basis, the dollar has posted a 3% loss, on pace for its worst monthly showing in a year.

Some analysts said the dollar may have benefited from month-end demand, as investors squared up positions for November, a period that featured a sharp sell-off in the U.S. currency with the market pricing in rate cuts next year.

Others, however, expected a dollar sell-off at month-end with stocks’ sharp gains for November. There were sell dollar signals at some of the biggest U.S. banks, analysts said.

“We were expecting dollar selling at month-end given how much U.S. equities rallied. That typically means foreign asset managers would have sold dollars forward,” said Vassili Serebriakov, FX strategist, at UBS in New York.

“But it’s possible that some of the selling happened earlier in the month. So maybe there’s less dollar selling at month end.”

Dollar gains persisted despite reports that showed U.S. inflation continued to moderate in October and jobless claims rose in the latest week suggesting a slowing labor market.

Inflation as measured by the personal consumption expenditures (PCE) price index was unchanged in October after climbing 0.4% in September. In the 12 months through October, the PCE price index increased 3.0%. That was the smallest year-on-year gain since March 2021 and followed a 3.4% advance in September.

Meanwhile, initial claims for state unemployment benefits increased 7,000 to a seasonally-adjusted 218,000 for the week ended Nov. 25. Economists had forecast 226,000 claims.

In other currencies, the euro fell after euro zone inflation eased by more than forecast this month, fuelling bets of early European Central Bank rate cuts.

Consumer price growth in the 20 countries that share the euro currency dropped to 2.4% in November from 2.9% in October, well below expectations for a fall to 2.7%.

The euro last changed hands at $1.0889 against the dollar, down 0.7%. It is still poised to show a monthly gain of 3%, the largest since November 2022.

Against the yen, the dollar rose 0.7% to 148.20 yen. For November, the greenback was down 2.3%, on pace for its largest monthly fall since December last year.

“The broader picture is that the dollar has weakened quite substantially in November. It’s still probably a two-way risk from here in terms of the Fed December meeting,” Serebriakov of UBS said.

“The U.S. data hasn’t slowed significantly. Inflation has but activity data remains relatively resilient,” he added.

U.S. rate futures have priced in about a 47% chance of a rate cut at the March 19-20, 2024 meeting, rising to about 78% probability at the April 30-May 1 meeting, the CME FedWatch Tool showed on Thursday. Overall, the rates market sees roughly 100 basis points (bps) of cuts by the end of 2024, according to LSEG data.

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Currency bid prices at 4:30PM (2130 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index 103.4800 102.8200 +0.66% -0.010% +103.5900 +102.7100

Euro/Dollar $1.0887 $1.0969 -0.75% +1.61% +$1.0984 +$1.0879

Dollar/Yen 148.1800 147.2400 +0.64% +13.02% +148.5000 +146.8500

Euro/Yen 161.34 161.51 -0.11% +15.00% +161.9400 +160.6000

Dollar/Swiss 0.8753 0.8737 +0.19% -5.33% +0.8770 +0.8681

Sterling/Dollar $1.2625 $1.2695 -0.55% +4.40% +$1.2710 +$1.2604

Dollar/Canadian 1.3564 1.3589 -0.18% +0.11% +1.3626 +1.3553

Aussie/Dollar $0.6607 $0.6617 -0.14% -3.07% +$0.6650 +$0.6571

Euro/Swiss 0.9529 0.9585 -0.58% -3.70% +0.9590 +0.9474

Euro/Sterling 0.8621 0.8640 -0.22% -2.52% +0.8649 +0.8615

NZ $0.6155 $0.6156 +0.00% -3.05% +$0.6182 +$0.6123

Dollar/Dollar

Dollar/Norway 10.8050 10.6310 +1.84% +10.32% +10.8240 +10.6690

Euro/Norway 11.7625 11.6879 +0.64% +12.09% +11.7848 +11.6717

Dollar/Sweden 10.4919 10.3624 +0.59% +0.81% +10.5397 +10.3450

Euro/Sweden 11.4228 11.3560 +0.59% +2.45% +11.4840 +11.3576

© Reuters.

Investing.com – The U.S. dollar edged higher in early European trade Thursday, but remained near a three-month low ahead of a key reading of U.S. inflation later in the session.

At 04:50 ET (09:50 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.4% higher to 103.120, just above the 102.46 level it hit on Wednesday, its lowest since Aug. 10.

Core PCE seen lowest since 2021

The dollar has received something of a boost after data showed the grew faster in the third quarter than initially reported. 

However, it’s still down 3.2% in November, its worst month in a year, on growing expectations the Fed will cut interest rates in the first half of 2024.

These expectations were boosted earlier this week after Fed Governor , widely seen as a hawkish voice at the central bank, flagged the possibility of a rate cut in the months ahead, if the recent decline in inflation continues.

With this in mind, traders await the release of the Fed’s preferred inflation gauge, the personal consumption expenditures price index, later Thursday.

The , which strips out food and fuel costs and is considered a better gauge of underlying inflation, is expected to have risen 3.5% on a year-over-year basis, a drop from 3.7% the prior month, and the lowest since mid-2021. 

Euro weakens ahead of eurozone inflation

In Europe, fell 0.4% to 1.0924, with the euro retreating ahead of the release of the latest eurozone inflation data.

The November release is expected to fall to 2.7% on an annual basis, from 2.9% the prior month. However, data released on Wednesday showed that German inflation eased to 2.3% in November, significantly more than the 2.6% expected.

The euro was also hit by the news that the contracted by 0.1% in the third quarter of the year, weaker than the 0.1% growth expected.

fell 0.2% to 1.2671, retreating further from the three-month top of 1.2733 seen earlier in the week.

Yen continues sharp recovery

In Asia, traded marginally lower to 147.18, with the yen receiving little support from data that showed grew less than expected in October, while remained muted. 

Still, the yen marked a sharp recovery from near 33-year lows in November, and was set to rise 3% in the month, its best monthly gain since November 2022, when the government had intervened in currency markets. 

edged lower to 7.1295, after a stronger midpoint fix from the People’s Bank of China. But gains were limited after data showed a sustained decline in Chinese manufacturing activity.

© Reuters

Investing.com – The U.S. dollar retreated in early European trade Friday, as a key inflation release added to expectations that U.S. interest rates have peaked.

At 04:40 ET (09:40 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.2% lower to 103.212, after clocking its weakest monthly performance in a year in November.

Dollar falls after PCE release

The eagerly awaited rose 3% in October from a year ago, according to data released on Thursday, falling from 3.4% the previous month.

This index is widely seen as the Federal Reserve’s preferred gauge of inflation, and although the reading was still above the Fed’s 2% target, the trajectory is clearly lower.

The main economic release Friday is the , while traders will also pay close attention to comments from Fed Chair later in the session, looking for clues of the central bank’s rate outlook.

“The FX market is set to remain highly sensitive to any activity data point, but there is a sense dollar bulls have survived the consumer spending and PCE risk, so that today’s ISM figures may not have a big impact – barring any big surprises,” said analysts at ING, in a note.

Euro helped by manufacturing PMI data

In Europe, rose 0.1% to 1.0897, with the euro edging higher after steep overnight losses, helped by data showing the broad-based downturn in eurozone manufacturing activity eased slightly last month, while remaining firmly in contraction territory..

HCOB’s final rose to 44.2 in November from October’s 43.1, above a preliminary estimate of 43.8. 

Importantly, the downturn in Germany’s dominant manufacturing sector eased in November, increasing for the fourth month in a row.

rose 0.3% to 1.2666, heading back towards the recent three-month top of 1.2733, after data from Nationwide indicated that rose unexpectedly in monthly terms for the third time running in November.

House prices rose by 0.2% on the month in November, after a 0.9% increase in October. Compared with a year ago, house prices were 2% lower – the smallest such drop in nine months.

Yen set for another weekly gain

In Asia, traded 0.3% lower to 147.74, on course for its third straight week of gains against the dollar, pulling it away from the three-decade low of 151.92 it touched in the middle of November.

edged higher to 7.1376, after a private survey showed that rebounded unexpectedly in November. But the reading contrasted with official data released on Thursday, which showed a sustained contraction in the .