Investing.com – The US dollar slipped slightly on Thursday on rising expectations of another rate cut by the Federal Reserve next week, while the euro edged higher ahead of the meeting latest policy of the European Central Bank.
At 04:50 ET (09:50 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading 0.1% lower at 106.245.
Fed cut next week probably
The latest US came in largely as expected on Wednesday, and while more inflation data is due later in the session, in the form of November, interest rate cuts are expected to the Federal Reserve next week on consolidation.
“There were no real surprises in yesterday's CPI data and the market has confirmed its view that the Fed may cut 25bp next week. This move will be marked as the Fed taking the opportunity to deliver less restrictive policy while it can,” said analysts at ING, in a note.
This has cut interest rates by 75 basis points since September and markets are currently expecting another 25-bps cut at the December 17-18 meeting.
Euro awaits ECB decision; CHF falls after a sharp cut
Much of the day's attention is on the European market, up 0.2% to 1.0516, ahead of Thursday's policy setting meeting with the European Central Bank, its last policy meeting of the year.
They are widely expected to agree to another 25-bps rate cut, the fourth such cut this year, as the central bank grapples with the euro zone economy at risk of recession, and faces or -political stability at home and the prospect of new trade. war with the United States.
Along with this decision, the ECB will reveal its latest quarterly forecasts on growth and inflation.
“We believe there could be some downward revision of growth and perhaps even inflation forecasts today,” ING said. “The ECB's market prices are already seeing rates being cut to farmland (sub-2%) next summer. But that price could move even lower. Overall we remain bearish on EUR/USD and do not see the case for the ECB to push back strongly against current market prices.”
traded 0.1% higher to 1.2761, and rose 0.2% to 0.8857 after interest rates fell by 50 basis points as it tried to control the value of the Swiss franc.
This marks the fastest decline in borrowing costs since the SNB's sudden emergency rate cut in January 2015, which was implemented when the bank abandoned its minimum exchange rate with the euro.
Chinese yuan looks to CEWC meeting
In Asia, it rose 0.1% to 7.2675, with the focus on China's Central Economic Work Conference (CEWC), a two-day meeting that is due to end later on Thursday.
The CEWC is an important event as they consider how China will deal with internal challenges such as slow growth, weak consumption, and external pressures such as trade tensions.
China's top leaders and policymakers are weighing the option of devaluing the yuan in 2025 in anticipation of an increase in US trade tariffs when Donald Trump returns to the White House next month, Reuters reported.
it gained 0.1% to 152.50, and rose 0.7% to 0.6513 after data showed the country's growth was higher than expected in November while it fell unexpectedly.
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