The dollar index (DXY00) Wednesday rose by +1.04% and posted a 2-year high. The dollar rallied Wednesday after the FOMC signaled only 50 bp of interest rate cuts next year, down from a September projection of 100 bp of rate cuts. The dollar also moved higher after the FOMC raised its US 2024 GDP and core PCE price estimates and lowered its US unemployment rate forecast. Hawkish comments from Fed Chair Powell pushed the dollar to its high Wednesday when he said we need a restrictive monetary policy to reach our inflation goal. Wednesday’s US housing news was mixed for the dollar, but a record Q3 current account deficit was bearish for the dollar.
US Nov housing starts unexpectedly fell -1.8% m/m to 1.289 million, weaker than expectations of an increase to 1.345 million. However, Nov building permits, a proxy for future construction, rose +6.1% m/m to a 9-month high of 1.505 million, stronger than expectations of 1.430 million.
