The dollar exchange rate came under pressure today, while the euro maintained the gains it achieved overnight. This amid interest rate uncertainty, with some data expecting the decline to be limited to the eurozone.
Liquidity is expected to remain weak, as currency trading will likely be limited. US markets closed yesterday, and a shorter trading session was held today, Friday, due to Thanksgiving.
Lowest level in two and a half months
The dollar index fell by 0.029 percent to 103.73. It remained close to the lowest level in 2.5 months at 103.17, which it hit earlier this week. This indicator measures the performance of the US currency compared to six currencies.
During November, the index fell by 2.8 percent, heading towards recording the weakest monthly performance in a year. That is amid growing expectations that the Federal Reserve finished raising interest rates and may begin lowering them next year.
British pound and Australian dollar
The British pound recorded $1.2539 in recent transactions, rising 0.05 percent during the day. Meanwhile, the Australian dollar rose 0.14 percent to $0.657. Whereas, its New Zealand counterpart rose 0.07 percent to $0.605.
The euro recorded $1.0904 after it rose 0.16 percent overnight following a series of preliminary surveys. The surveys showed that the recession in Germany may be less than expected, offsetting the pessimistic reading of business in France.
Bank of Japan may back off monetary incentives
On the other hand, consumer price growth in Japan rose slightly in October, after declining in the previous month. This confirmed investors’ views that the Bank of Japan may pull back on monetary incentives soon due to inflation.
In this context, economists at ING expected that the Bank of Japan would deviate from its extremely accommodating stance next year.
Read: OPEC+ shocks markets with delayed meeting, fueling speculation on potential causes
Factory activity in Japan
The Japanese yen rose 0.04 percent to 149.49 per dollar. The Asian currency is slowly rising from the lowest level in 33 years of 151.92, which it touched at the beginning of last week. Thus, the Asian currency rose 1.5 percent during this month.
In addition, a survey revealed that factory activity in Japan was constrained for the sixth consecutive month in November. Meanwhile, there was little change in the modest growth in the services sector. This highlights the fragility of the economy amid weak demand and continued inflation.
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