USD holds steady, awaiting US economic data and Fed decision

The dollar strengthened against the euro and was little changed against the yen on November 14, as markets awaited US economic data and traders weighed whether the US Federal Reserve was likely to cut interest rates in December.

Photo: THX/TTXVN

The US dollar index, which measures the greenback's strength against a basket of major currencies, rose 0.07% to 99.31 on Friday. It fell 0.2% for the week.

The euro/dollar pair ended the session down 0.12% at $1.1617. However, it ended the week up 0.51% as risk appetite deteriorated amid growing speculation that the Fed will pause its rate-cutting cycle next month. However, the pair's close above $1.16 still sets the stage for further gains.

Against the Japanese yen, the dollar weakened 0.02% to 154.52 yen but still managed to gain 0.7% on the week. The yen remains under pressure as the new government led by Sanae Takaichi signals a more aggressive approach to fiscal policy. In addition, the Bank of Japan's (BoJ) cautious stance on tightening monetary policy also weighs on the currency.

A slew of economic data delayed by the US government shutdown will begin to be released next week, and risk sentiment has been hit by concerns about lofty equity valuations and uncertainty over Fed policy.

Several Fed officials have expressed caution about further easing, citing inflation concerns and a lack of key job market data, suggesting the Fed may not commit to a series of rate cuts at its final meeting of 2025.

The market is now pricing in a 41% chance the Fed will cut rates by 25 basis points at its December meeting.

Lou Brien, a strategist at investment brokerage DRW Trading, said the market was somewhat chaotic due to the lack of data and investors reacting to comments from Fed officials. He said the release of US economic data was likely to increase market volatility, which has been reduced in recent weeks due to the lack of data.

Foreign exchange strategists at investment bank Bank of America (BofA) noted that volatility has also declined as interest rate differentials have reached new lows. This comes as several central banks, including the European Central Bank (ECB), are nearing the end of their monetary easing cycles.

BofA now expects interest rate differential volatility and its impact on FX markets to increase as US economic data releases, not to mention significant uncertainty around the BoJ’s interest rate guidance. This environment could reduce the attractiveness of yen investments, help the dollar appreciate, and maintain significant buying pressure on USD/JPY in the coming weeks.

Source: https://baotintuc.vn/thi-truong-tien-te/dong-usd-dung-vung-doi-du-lieu-kinh-te-my-va-quyet-dinh-cua-fed-20251115103017167.htm