U.S. Dollar Extends Slide As Fed Signals Future Rate Cuts

(RTTNews) - The U.S. dollar continued its early weakness against other major currencies in the Asian session on Thursday, after the Federal Reserve signaled three interest rate cuts for next year following its latest policy meeting.

The U.S. Federal Reserve left interest rates unchanged and the accompanying statement signaled three interest rate cuts next year as inflation eased over the past year.

On Wednesday, the Federal Reserve kept the target range for the federal funds rate at 5.25 to 5.50 percent but hinted at three rate cuts in 2024.

The median forecast indicates rates will be lowered to 4.6 percent by the end of 2024. During the post-meeting press conference, the Fed Chair Jerome Powell acknowledged that rate cuts will be a "topic of discussion" at upcoming meetings.

The U.S. dollar started falling against its major rivals after the U.S. Fed policy meeting.

In the Asian trading now, the U.S. dollar fell to a 2-week low of 1.0915 against the euro and a 9-day low of 1.2653 against the pound, from yesterday's closing quotes of 1.0873 and 1.2618, respectively. If the greenback extends its downtrend, it is likely to find support around 1.10 against the euro and 1.27 against the pound.

The greenback dropped to a 4-1/2-month low of 140.97 against the yen and nearly a 2-week low of 0.8666 against the Swiss franc, from Wednesday's closing quotes of 142.88 and 0.8715, respectively. On the downside, 139.00 against the yen and 0.85 against the franc are seen as the next support levels for the greenback.

Against the Australia and the New Zealand dollars, the greenback slipped to 4-1/2-month lows of 0.6728 and 0.6250 from yesterday's closing quotes of 0.6658 and 0.6173, respectively. The greenback may test support near 0.69 against the aussie and 0.64 against the kiwi.

The greenback slid to a 2-1/2-month low of 1.3456 against the Canadian dollar, from yesterday's closing value of 1.3517. The next possible downside targets for the greenback is seen around the 1.33 area.

Looking ahead, Swiss producer and import prices for November is due to be released at 2:30 am ET in the pre-European session.

At 3:30 am ET, the Swiss National Bank will announce its monetary policy decision. At the quarterly meeting, the Swiss National Bank is widely forecast to keep its benchmark rate at 1.75 percent.

At 7:00 am ET, the monetary policy summary and the minutes from the Bank of England are due. The UK central bank, led by Governor Andrew Bailey, is likely to hold the benchmark rate at a 15-year high of 5.25 percent for third consecutive meeting and also retain its hawkish bias, defying calls for premature rate cuts.

The ECB Governing Council, headed by President Christine Lagarde, is set to announce its decision at 8.15 am ET. The main refinancing rate, or refi, is likely to be retained at 4.50 percent, the deposit facility rate at a record high 4.00 percent and the lending rate at 4.75 percent.

ECB President Christine Lagarde and Vice-President Luis de Guindos will explain the monetary policy decisions and answer questions from journalists in Frankfurt at 8:45 am ET.

In the New York session, Canada manufacturing sales for October, U.S. retail sales for November, U.S. weekly jobless claims, U.S. import and export prices for November and U.S. business inventories for October are slated for release.