Dollar Edged Higher, Trading Subdued on Fed Doubts

23 Nov 2023 , 08:18 AM

The dollar nudged higher on data that cast doubts over the Federal Reserve’s ability to push interest rates much higher, while holiday-thinned trading left currency markets subdued.

The dollar index, which tracks the greenback against a basket of major currencies, rose 0.1% to 105.42, after data showed U.S. durable goods orders fell for a second straight month in October, suggesting the economy is losing momentum.

The data also showed core personal consumption expenditures (PCE), the Fed’s preferred inflation gauge, rose 0.2% in October, below expectations.

The data, combined with recent comments from Fed officials that suggested the central bank may be nearing the end of its tightening cycle, boosted risk appetite and sent U.S. Treasury yields lower.

Lower yields make the dollar less attractive to investors seeking higher returns.

‘The data reinforced the view that the Fed may be approaching the end of its tightening cycle,’ said Alvin Tan, a currency strategist at RBC Capital Markets. ‘That’s taking some of the pressure off the dollar.’

However, trading volumes were light due to holidays in Japan and the United States.

The euro was flat at $1.0425, while the yen was up 0.1% at 136.22 per dollar.

The pound was down 0.1% at $1.1927, after data showed U.K. consumer confidence fell to a 15-month low in November.

The Australian dollar was down 0.2% at $0.6954, while the New Zealand dollar was flat at $0.6380.

In emerging markets, the Chinese yuan was up 0.2% against the dollar, while the Indian rupee was down 0.1%.