The dollar remained stable on Thursday as traders awaited various business activity surveys to assess the economic health of major countries and its potential impact on the global interest rate outlook.
Later in the day, Flash Purchasing Managers' Index (PMI) figures for the U.S., the UK, and the euro zone are expected, offering insights into their respective manufacturing and service sectors.
In early Asian trading, the euro slightly gained to $1.0831, while the pound remained steady at $1.2638.
Against the yen, the dollar inched higher, surpassing the 150 level to trade at 150.34 yen.
City Index's Senior Market Analyst, Matt Simpson, noted that composite PMIs for the U.S., Europe, and the UK suggest either expansion at an accelerated pace or a slowdown at a diminishing rate.
This indicates potential upward pressure on growth and inflation, aligning with the 'higher-for-longer' narrative that traders are cautious about.
Despite market expectations for global rate cuts, central banks like the Federal Reserve and the European Central Bank have been resisting such actions due to lingering inflationary pressures.
The Fed's latest meeting minutes reiterated their cautious approach towards rate cuts.
Market analyst Tony Sycamore from IG mentioned that while the Fed's message remains consistent, there is still uncertainty in the market regarding the timing of rate cuts. The recent data showing higher-than-expected producer and consumer prices in the U.S. has pushed back expectations for rate cuts.
Traders are currently pricing in around a 30% chance of the Fed initiating rate cuts in May, significantly lower than the over 80% chance estimated a month ago, according to the CME FedWatch Tool.
In response to recent data and a robust labor market, the market sentiment has shifted, causing the dollar index to fall slightly to 103.92.
In other currency movements, the Australian dollar saw a 0.07% increase to $0.65565, and the New Zealand dollar reached a one-month high of $0.6198. The Reserve Bank of New Zealand (RBNZ) is set to meet next week, with expectations for the cash rate to remain at 5.5%, though some economists see a possibility of a rate hike.
Overall, the market continues to react to economic data and central bank communications, shaping expectations around global interest rates.
Paraphrasing text from "Investing" all rights reserved by the original author.
