Dollar Retreats Slightly After FOMC-Fueled Surge

Good morning traders, and welcome to Friday. As we near the end of this highly eventful week, the markets are still processing the major moves seen over the past few days, driven largely by central bank decisions and key data releases.

Yesterday, Thursday, brought a flurry of activity. The Bank of Japan left rates unchanged but delivered dovish comments from Governor Ueda, which significantly weakened the yen. At the same time, the Bank of England implemented a 25 basis point rate cut, aligning with expectations, but the British pound failed to find support, weakening further as a result. These moves capped off a week dominated by central bank policy, especially the hawkish stance from the Federal Reserve on Wednesday, which strengthened the dollar and pressured global indices.

Moving to Friday, early hours brought disappointing retail sales data from the UK, coming in at just 0.2% versus the 0.5% expected. This added to the pound’s bearish sentiment, making it the weakest currency during the European session so far. Later today, we await retail sales data from Canada and the Core PCE Price Index from the US, both of which could shape market sentiment heading into the weekend.

On the currency front, we’re seeing a slight correction after Thursday’s moves. The dollar, which surged following the FOMC decision, is pulling back modestly, while the yen is showing a minor recovery from its recent steep losses. The Australian and New Zealand dollars are gaining traction, while the pound continues to lag.

Commodities remain under pressure, largely due to the dollar’s strength. Oil and precious metals are trading lower, struggling to find upward momentum. However, indices are attempting another recovery after Thursday’s failed bounce. Futures in the US point to a possible stabilization, while European indices are cautiously trying to edge higher.

It’s a day of corrections so far, but all eyes remain on the upcoming data releases to see if they spark any fresh directional moves. Let’s see how the week concludes and whether indices can stage a meaningful rebound ahead of the Christmas holiday period.

Source: https://www.axiory.com/analytics/market-news/dollar-retreats-slightly-after-fomc-fueled-surge