Dollar Steady, Swiss Franc Falls on Large Rate Cut
The U.S. dollar was broadly steady on Thursday while the euro traded a touch higher before the European Central Bank's monetary policy decision later in the day, where a quarter-point rate cut is widely expected.
The Swiss franc fell after its central bank lowered interest rates by more than expected - 50 basis points - while the Australian dollar surged after domestic employment data beat forecasts.
The dollar index , which measures the currency against a basket of six others, was little changed at 106.58, a day after a U.S. inflation reading cemented bets for a rate cut from the Federal Reserve next week.
The consumer price index rose 0.3% last month, in line with forecasts, the Labor Department's Bureau of Labor Statistics said.
Markets are now almost fully pricing a 25 basis point cut at the Fed's Dec. 17-18 meeting, compared with about a 78% chance a week ago, the CME FedWatch tool showed.
The ECB is also all but certain to cut interest rates when it announces policy on Thursday and will likely signal further easing ahead as inflation eases back to target and economic growth remains subdued.
The euro was last up 0.2% against the dollar at $1.0519.
The Swiss franc fell against both the dollar and the euro after the Swiss National Bank opted for a 50 basis point interest rate cut. A majority of economists surveyed by Reuters had expected a smaller 25 basis point cut.
The dollar was up 0.3% at 0.8874 francs, while the euro rose as high as 0.93455 francs, its strongest level against the Swiss currency since Nov. 25.
The dollar was little changed at 152.52 yen , after hitting a two-week high of 152.845 yen the previous day as market players trimmed back bets for a rate hike in Japan next week.
Reuters reported on Thursday that the BOJ is leaning toward keeping rates steady, as policymakers prefer to spend more time scrutinising overseas risks and clues on next year's wage outlook.
But with markets now eyeing a rate hike just a month later in January, the shift has not really become a big driver for investors to pile into the dollar against the yen, said Akira Moroga, chief market strategist at Aozora Bank.
The Australian dollar was up 0.6% at $0.6408, pulling further away from the just over one-year low of $0.63370 touched on Wednesday.
Australia's jobless rate posted a shock decline to an eight-month low in November, prompting markets to scale back bets for easing from the Reserve Bank of Australia in February.
The kiwi climbed 0.4% to $0.5805 , after hitting its lowest since Nov. 2022 at $0.57625 in the previous session.
The yuan was last trading around 7.2678 per dollar, up about 0.2% in offshore trading .
Source : Reuters
