Dollar Slips as U.S. Rates Plateau: Economic Indicators and Global Markets Recap

The dollar went down compared to other currencies because it seems that interest rates in the United States have stopped going up. This happened after reports showed that U.S. businesses were doing okay in November, but there was a decrease in private sector jobs, as expected for a slowdown in the economy at the end of the year.

Not much trading happened because U.S. markets closed early due to the Thanksgiving holiday. A market analyst in London said it’s very quiet, and the market is probably taking the easiest route.

A report by S&P Global said that the U.S. business activity didn’t change much in November, but there was a small increase in services, while manufacturing decreased. When this index is above 50, it means the private sector is growing. However, because there wasn’t much growth in orders, businesses had to let some workers go.

This is seen as helpful for the Federal Reserve’s efforts to control inflation. The dollar index, which measures the U.S. currency against others, went down a bit to 103.35, close to the lowest point in 2 and a half months. This is the weakest performance in a year, as people think the Federal Reserve might not raise interest rates anymore and might even lower them next year.

In Japan, the yen stayed steady against the dollar after news that Japan’s prices went up a bit in October. This makes investors think that the Bank of Japan might reduce its support soon.

Economists predict that the Bank of Japan might change its policy next year, especially if Japanese government bonds stabilize. They think the bank might stop a program related to interest rates in the first quarter of the year and might increase rates in 2024.

In Europe, the euro went up a bit against the dollar after confirming that Germany’s economy shrank a little in the third quarter. However, German business confidence improved in November. The euro had gained earlier in the week because preliminary data suggested that Germany might not go into a deep recession.

The British pound increased after reports showed that British companies were growing in November, raising hopes that Britain might avoid a recession.

In the world of cryptocurrencies, bitcoin went up to $38,415, its highest since April 2022. The market has been revived by new interest, including from traditional finance companies, to trade bitcoin and other digital currencies.