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The dollar index (DXY00) fell to a 1.75-month low today, down by 0.55%, following the Federal Open Market Committee’s (FOMC) decision to cut the federal funds target range by 25 basis points and initiate $40 billion monthly purchases of T-bills. US weekly jobless claims rose by 44,000 to 236,000, exceeding expectations and indicating labor market weakness.
The US September trade deficit unexpectedly shrank to $52.8 billion, the smallest in 5.25 years, versus expectations of a widening to $63.1 billion. Market sentiment suggests a 24% chance of another 25 basis point cut at the upcoming January 27-28 FOMC meeting.
In response to the dollar’s decline, the euro (EUR/USD) rose to a 2.25-month high, up by 0.46%, driven by anticipated growth forecasts from the European Central Bank. Additionally, Japan’s Q4 BSI large manufacturing confidence index rose to a one-year high of 4.7, supporting the yen (USD/JPY), which fell by 0.60% today.
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