On Thursday, the dollar experienced further decline, continuing its downward trend from the previous day, following a less hawkish outlook from the Federal Reserve than many market participants had anticipated. While the greenback did receive some support amid a dip in Asian shares and U.S. futures—sparked by disappointing earnings from cloud computing giant Oracle—overall selling pressure remained.
The euro climbed to $1.1713, marking a near two-month high and reflecting a 0.15% increase after a robust gain of 0.6% on Wednesday. Meanwhile, sterling remained steady at $1.1338, following a 0.65% rise the day before. The dollar also weakened against the yen, trading down 0.2% at 155.7 yen after a 0.56% dip on Wednesday.
The Federal Reserve’s decision to lower rates by 25 basis points, while largely anticipated, revealed a more tempered stance in their messaging and projections. Market analyst Chris Turner emphasized that investor expectations had leaned toward a more aggressive rate cut, with only two dissenters voicing opposition. The Fed’s indication of a possible rate cut in their median forecast for 2026 added to the cautious sentiment, as Chairman Jerome Powell appeared hesitant to confirm that the Fed was definitively pausing rate adjustments.
Prior to the Fed meeting, speculation surrounded whether the messaging would mirror that of the Australian central bank or an influential European Central Bank policymaker, both hinting at forthcoming rate hikes. Compounding the dollar’s woes, U.S. Treasuries saw increased demand as the Fed announced plans to commence purchasing short-dated government bonds starting December 12, with an initial round totaling around $40 billion in Treasury bills aimed at improving market liquidity.
In contrast to the dollar’s struggles, the Swiss franc gained strength after the Swiss National Bank (SNB) opted to maintain its policy rate at 0%. The SNB noted that a recent agreement to reduce U.S. tariffs on Swiss goods had positively influenced the economic outlook, despite inflation levels undershooting expectations. Consequently, the dollar fell 0.46% to 0.7963 francs, the lowest it had been in three weeks. The euro also declined, trading down 0.27% to 0.9331 francs.
Despite the franc’s strength presenting difficulties for the SNB by dampening inflation, Chairman Martin Schlegel reaffirmed that the threshold for implementing negative rates remains high. Elsewhere, the Australian dollar faced headwinds following data that indicated a decline in employment for November—the most significant drop in nine months.
In the cryptocurrency space, Bitcoin, often regarded as a gauge of risk appetite, was adversely affected by the tech sector’s selloff, briefly falling below the $90,000 mark. It was last seen hovering slightly above that threshold, down 2.4%. Ether also suffered, losing more than 4% to trade at approximately $3,200. Gracie Lin, CEO of OKX Singapore, commented on the cryptocurrency market’s response, indicating that investors were still working through excess leverage from October, contributing to a muted reaction to macroeconomic signals.
