USD tumbles on dovish Fed
● The USD ended the week lower as the Federal Reserve signalled rate cuts next year, while central banks in Europe stuck to their hawkish paths.
● Federal Reserve Chair Jerome Powell, on Wednesday, indicated that the central bank is moving toward interest-rate cuts as inflation falls. That's a U-turn from just two weeks ago when Powell warned it was too early to talk about rate cuts.
● However, Federal Reserve Bank of New York President John Williams pushed back against the market�s rate cut expectations. He said on Friday that "we aren't really talking about rate cuts right now" at the Fed, and it's "premature" to speculate about them.
● The European Central Bank and the Bank of England expressed their desire to keep policy tight well into next year to combat inflation, as they kept interest rates unchanged on Thursday.
● The INR ended the week higher, largely attributed to the broad weakness and due to the sudden inflow of USD into the market.
● Indian retail inflation rose at its fastest pace in three months in November amid high food prices.
● The annual retail inflation increased to 5.55% in November, up from 4.87% annually in October. However, this was below the market expectation of 5.7%.
● Core inflation, which doesn�t include food or fuel, was estimated to be around 4.05% to 4.2% in November, down slightly from 4.2% to 4.28% in October.
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