US Dollar Slips as Inflation Data and Risk Appetite Improve

The US dollar weakened on Thursday following the release of economic data showing continued stabilization in inflation, solid growth fundamentals, and signs of resilience in the labor market. The softer tone in risk sentiment—supported by diminishing geopolitical worries—has also contributed to the greenback’s retreat.


Investors reacted positively after the US reported stronger‑than‑expected GDP and steady inflation measures, which boosted global market sentiment and encouraged flows into equities rather than safe‑haven currencies. At the same time, recent developments around Greenland, including diplomatic clarifications that discussions do not involve issues of sovereignty, helped ease a source of uncertainty that had been weighing on markets.


Labor Market and Growth Data Support the Shift

Weekly jobless claims rose modestly by about 1,000 to 200,000, in line with expectations and below forecasts, reflecting an overall healthy labor market. This resilience in employment conditions can reduce immediate pressure on the Federal Reserve to cut interest rates, which in turn tends to temper demand for the dollar.


Revised national accounts showed that the US economy expanded at an annualized rate of 4.4% in the third quarter, slightly above forecasts and the preliminary estimate, underscoring sustained growth momentum. Meanwhile, the inflation‑adjusted personal consumption expenditures (PCE) price index—the Federal Reserve’s preferred inflation gauge—rose 0.2% on the month, with the annual pace near 2.8%, broadly consistent with expectations. These readings suggest inflation pressures are moderate and have not accelerated beyond the central bank’s comfort zone.


Dollar Under Pressure as Markets Digest Data

As traders absorbed the combination of strong growth and stable inflation, demand shifted away from the US dollar toward riskier assets such as stocks. The shift reflects growing confidence that the US economy can sustain growth without triggering runaway inflation, even as the Federal Reserve maintains a cautious stance on future monetary policy moves.
Taken together, the latest data paint a picture of an economy growing steadily with manageable price pressures—conditions that have eased some of the upward pressure on the US dollar and helped fuel broader market optimism.