The U.S. dollar traded lower on Thursday as the so-called “sell America” narrative lost momentum after Donald Trump abandoned tariff threats and ruled out using force to take control of Greenland. The greenback was largely unmoved by fresh U.S. inflation data, which came in line with market expectations.
New Personal Consumption Expenditures (PCE) figures — the Federal Reserve’s preferred inflation gauge — showed that U.S. consumer spending rose solidly in October and November. The data suggested the economy remains on track for a third consecutive quarter of strong growth.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased by 0.5% in November after an identical rise in October, according to the Commerce Department’s Bureau of Economic Analysis. The result matched economists’ forecasts and reinforced signs of resilient domestic demand.
Aussie jumps to 15-month high
The dollar had rebounded against the euro on Wednesday following Trump’s Greenland remarks, after slipping just under 1% earlier in the week. It was last down 0.35% at $1.1726 per euro, while falling 0.52% to 0.7913 Swiss francs.
The Australian dollar surged to a 15-month high, supported by data showing an unexpected drop in the unemployment rate. Meanwhile, the Japanese yen remained under pressure after Prime Minister Sanae Takaichi called a snap election and pledged looser fiscal policies.
Earlier fears that Trump’s tariff threats toward allied nations over Greenland could trigger a broad selloff of U.S. assets had unsettled markets. However, analysts said there was little evidence of a sustained move away from the dollar.
“This isn’t really a ‘sell America’ trade — it’s more about risk management,” said Bob Savage, head market strategist at BNY, adding that increased hedging reflected higher volatility rather than capital flight.
While details of any Greenland framework agreement remain unclear, Savage said markets are likely to refocus on central bank policy and interest rate differentials once the current bout of volatility fades.
Aussie set for fourth straight daily gain
The Australian dollar was last up 0.83% at $0.6818, its strongest level since October 2024, and was on track for a fourth consecutive daily rise despite broader pressure on risk assets.
“The strength in the Australian and New Zealand dollars shows that expectations around short-term interest rate moves and central bank policy are still very much in play,” said Jane Foley, senior FX strategist at Rabobank.
The yen weakened 0.07% to 158.415 per dollar, hovering near last week’s 18-month low of 159.45. Markets are watching closely for a potentially hawkish signal from the Bank of Japan at Friday’s policy meeting, as authorities look to stabilize the currency near levels seen as intervention territory.
Japan’s super-long-dated government bonds extended gains on Thursday, amid expectations that the finance ministry may take steps to limit further rises in yields.
