Dollar closes worst week since July on interest rate path bets

The DXY Index has fallen by around 0.40%, marking a 1.60% weekly decline. The Fed’s hawkish stance on the matter is attributed to the cooling inflation and labour market conditions, which have led to the US Dollar’s decline.

The US Bureau of Labor Statistics reported that October’s Core Consumer Price Index missed the consensus, with the headline figure falling below the consensus of 3.3%. The Core Producer Price Index fell short of expectations, with retail sales declining by 0.1% monthly.

The number of US Initial Jobless Claims increased to 231,000, and industrial production fell short of expectations.

Housing Starts and Building Permits from October were better than expected. The Fed’s Susan Collins stated that further tightening will depend on incoming data. US Treasury yields slightly rose, with the 2-year rate increasing to 4.90%, while the 5- and 10-year rates rose to 4.45% and 4.44%, respectively.

The bets of a 25-basis-point hike in December are zero, with markets betting on rate cuts appearing sooner than expected in May 2024, if not March.