The dollar index (DXY00) on Thursday fell by -0.86%. The dollar on Thursday extended Wednesday’s sharp losses to a 4-1/4 month low. The dollar is under pressure after the Fed on Wednesday signaled an end to monetary tightening and projected interest rate cuts for next year. Also, Thursday’s slump in T-note yields has weakened the dollar’s interest rate differentials. In addition, Thursday’s rally in stocks has curbed liquidity demand for the dollar.
Thursday’s U.S. economic news was better than expected and bullish for the dollar. Weekly initial unemployment claims unexpectedly fell -19,000 to an 8-week low of 202,000, showing a stronger labor market than expectations of no change at 220,000. Also, Nov retail sales unexpectedly rose +0.3% m/m, stronger than expectations of -0.1% m/m.
