Dollar Slips After Fed Decision as Euro Strengthens on French GDP
The U.S. dollar edged lower on Thursday, giving back some of its overnight gains as investors digested the Federal Reserve’s latest rate decision and developments in the U.S.-China trade talks.
At 05:20 ET (09:20 GMT), the U.S. Dollar Index—which measures the greenback against six major currencies—fell 0.1% to 98.950, after hitting a two-week high late Wednesday.
Fed Signals Pause After Rate Cut
The Federal Reserve cut interest rates by 25 basis points to a range of 3.75%–4.00%, in line with expectations. However, future cuts this year remain uncertain amid limited economic data due to the ongoing U.S. government shutdown.
During his press conference, Fed Chair Jerome Powell said another rate cut of similar size was “far from certain” at the December meeting. Following his remarks, traders reduced the odds of another cut to 71%, down from 90% earlier.
Analysts at ING Bank noted that the Fed’s cautious tone made it harder to sell the dollar, suggesting only weaker U.S. jobs data could renew expectations for further easing next year.
The safe-haven dollar also found temporary support from uncertainty around trade negotiations between U.S. President Donald Trump and Chinese President Xi Jinping. Trump described their first in-person meeting in six years as “amazing,” saying the U.S. would cut tariffs on Chinese goods in exchange for China’s pledge to curb fentanyl exports and ease controls on rare earth minerals.
Still, analysts at Vital Knowledge commented that the agreement did not significantly change the overall state of U.S.-China trade relations.
Euro Rises After Strong French GDP
In Europe, the euro (EUR/USD) rose 0.2% to 1.1618 after data showed France’s economy grew 0.5% in the third quarter—outpacing forecasts of 0.2%. The stronger data helped boost sentiment ahead of eurozone-wide GDP figures, expected to show modest 0.1% growth quarter-on-quarter.
ING analysts said that while business surveys have been encouraging, the region’s “hard data” remains weak, making a sharp rise in the euro unlikely unless GDP surprises to the upside.
The European Central Bank (ECB) is due to meet later in the session and is widely expected to hold interest rates steady. ING added that President Christine Lagarde is unlikely to shift market expectations, which currently point to a small chance of a rate cut within the next nine months.
The British pound (GBP/USD) edged 0.1% higher to 1.3199 but stayed close to a five-and-a-half-month low.
Yen Weakens as BOJ Maintains Policy
In Asia, the Japanese yen (USD/JPY) fell 0.7% to 153.74 after the Bank of Japan (BOJ) left its policy unchanged and issued a cautious economic outlook. The BOJ warned of rising uncertainty but reiterated that it could raise rates if inflation and growth align with forecasts.
Meanwhile, the Chinese yuan (USD/CNY) slipped 0.2% to 7.1089 after the Trump-Xi meeting, pulling back from a one-year high. Trump told reporters he expected a trade deal with China “pretty soon,” citing progress on rare earth and agricultural agreements.
The Australian dollar (AUD/USD) traded flat at 0.6575, showing little reaction to global market moves.
