Authors: Chibuike Oguh and Alun John
NEW YORK/LONDON (Reuters) – The U.S. dollar was flat against major currencies on Friday as markets digested a glut of economic data that supported the Federal Reserve’s current monetary policy path.
The Labor Department said the U.S. producer price index was unchanged in September, and the latest economic data indicates the Fed is likely to cut interest rates again next month.
Consumer prices rose 0.3%, slightly warmer than expected, according to data released Thursday, while weekly jobless claims rose, pointing to a faint labor market. Weekly jobless claims data were distorted by Hurricane Helene. Next week’s numbers will be impacted by Hurricane Milton, the second hurricane in two weeks to hit the southeastern United States
The euro was unchanged at $1.1093, the pound rose 0.08% to $1.3072, while the dollar rose 0.35% against the Japanese yen at 149.12.
The rate was unchanged at 102.91, taking a breather after a recent steady rally that rose above 103 on Thursday, its highest level since mid-August as traders reduced bets on further massive rate cuts by the Federal Reserve at its remaining meetings this year .
According to CME’s Fedwatch tool, markets are betting on a nearly 91% chance of a 25 basis point cut at the next Fed meeting and a 9% chance of no cut.
“This slightly higher inflation rate has really kept the market from being overly aggressive in terms of how deep they expect interest rate cuts to be by the end of the year,” said Amarjit Sahota, executive director of Klarity FX in San Francisco. “So there was already an overprice there and it was basically eliminated this week.”
The British economy grew in August after two consecutive months of stagnation, providing Finance Minister Rachel Reeves with some relief ahead of the novel Labor government’s first budget announcement later this month.
However, apart from the dollar being broadly stable, the pound was little changed against the euro, trading at 83.67 pence against the common currency.
Traders are also watching French politics after the government presented a 2025 budget on Thursday with plans for 60 billion euros ($65.5 billion) in spending cuts and tax increases on the wealthy and enormous companies to tackle a growing budget deficit.
The budget is unlikely to be passed before December because French Prime Minister Michel Barnier and his allies in President Emmanuel Macron’s camp do not have a clear majority and will have no choice but to agree to numerous concessions.
Markets are also awaiting Saturday’s press conference of the Chinese Ministry of Finance on fiscal policy. It strengthened 0.22% against the dollar to 7.067 per dollar.
The Australian dollar strengthened 0.22% against the greenback to $0.6753, while the New Zealand dollar settled at $0.611 after the central bank cut interest rates by half a point on Wednesday and hinted at further cuts in the future.
In cryptocurrencies, bitcoin gained 5.38% to $62,930.00. rose 3.8% to $2,456.70.
“The market is satisfied because there is nothing there that really contradicts the narrative that the Fed is cutting; the only debate is how quickly they will make the cuts,” said Steven Englander, head of Global G10 FX Research at Standard Chartered (OTC 🙂 in New York.
“Overall, the data was somewhat encouraging for this narrative, and none of it discouraged the narrative that the Fed is cutting rates.”
Currency offer prices as of October 11 at 7:51 p.m
GMT
Description RIC Latest US Close Previous session Change percentage from the beginning of the year Pct High rate Low rate
Dollar Index 102.91 102.89 0.02% 1.52% 102.99 102.76
Euro/Dollar 1.0935 1.0938 -0.02% -0.93% 1.0953 USD 1.0927
Dollar/Yen 149.13 148.58 0.36% 5.72% 149.28 148.51
Euro/Yen 1.0935 162.48 0.37% 4.79% 163.4 162.32
Dollar/Swiss 0.8572 0.8563 0.11% 1.86% 0.8585 0.856
Pound sterling/dollar 1.3068 1.3061 0.08% 2.72% 1.3082 $1.3042
Dollar/Canadian 1.3759 1.3742 0.13% 3.8% 1.3785 1.3726
Australian/Dollar 0.6753 0.6742 0.19% -0.93% 0.6759 USD 0.6726
Euro/Switzerland 0.9374 0.9364 0.11% 0.95% 0.9387 0.9363
Euro/pound sterling 0.8367 0.8373 -0.07% -3.47% 0.8383 0.8365
New Zealand dollar/dollar 0.611 0.6095 0.27% -3.29% $0.6119 0.6072
Dollar/Norway 10.6961 10.7222 -0.24% 5.54% 10.7637 10.6837
Euro/Norway 11.6971 11.7412 -0.38% 4.22% 11.772 11.694
Dollar/Sweden 10.3693 10.3744 -0.05% 3% 10.4157 10.355
Euro/Sweden 11.3402 11.3617 -0.19% 1.93% 11.3883 11.3336
