SINGAPORE: The dollar found some support on Thursday from a broad risk-off mood in markets but failed to recoup most of its losses after the Federal Reserve delivered a less hawkish outlook than expected.
Investor sentiment soured after disappointing earnings from US cloud computing firm Oracle reignited worries that rising AI infrastructure costs may outpace profitability. This pressured risk assets, including stocks and cryptocurrencies, helping curb the dollar’s initial slide following Fed Chair Jerome Powell’s remarks.
The Australian dollar fell 0.7% to $0.6629, while the New Zealand dollar dropped 0.44% to $0.5791. Bitcoin slipped back below $90,000, and ether was down more than 4% at $3,197.15.
“Even with a softer Fed outlook, the market is still working through the excess leverage from October,” said Gracie Lin, OKX’s Singapore CEO, noting that thin liquidity and geopolitical uncertainty were dampening reactions to data.
At its two-day policy meeting, the Fed cut interest rates by 25 basis points as expected. Analysts pointed to a dovish tilt in the accompanying commentary and Powell’s press conference, prompting investors to short the dollar and bet on two rate cuts next year.
The euro rose above $1.17 to near a two-month high before easing to $1.1686. Sterling briefly touched $1.3391 but later traded at $1.3360. The yen steadied at 156.07 per dollar. The dollar index edged up 0.1% to 98.74 after hitting a three-week low.
Some strategists said they still expect room for rate cuts in 2026, especially if US labor data softens.
US Treasuries gained after the Fed said it would begin buying Treasury bills from December 12 to support market liquidity, starting with about $40 billion in purchases. The two-year yield fell 3.5 bps to 3.5300%, while the 10-year yield dropped 4 bps to 4.1215%.
— Reuters
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