Strengthening risk aversion in global markets provided support for the dollar on Thursday; however, the Federal Reserve’s (Fed) more dovish stance than expected was not enough to recover the dollar’s overnight losses against the euro, yen, and pound.
In Asia, investors sold off equities and crypto assets on concerns that AI infrastructure costs could outpace profitability following weak earnings from US cloud computing giant Oracle. This move limited the dollar’s decline due to safe-haven demand.
Federal Reserve Chairman Jerome Powell’s remarks surprised investors who were expecting a more hawkish tone. The Euro remained flat at $1.1704 after Wednesday’s 0.6% rise. The pound also traded calmly at $1.13374. The dollar/yen fell 0.14% to 155.8. The Fed, as expected, implemented a 25 basis point interest rate cut. However, market reaction focused more on the messages, projections, and the split in decision-making rather than the decision itself. ING Markets Global Head Chris Turner noted that investors were expecting a “hawkish rate cut,” but the Fed still forecasts one more rate cut in 2026. The Fed’s announcement that it will purchase approximately $40 billion worth of short-term bonds starting December 12th also put pressure on the dollar. Weakness in technology stocks continued to affect the most risk-sensitive segments of the market. Bitcoin briefly fell below $90,000 and traded near that level, down 2.4%. Ether lost more than 4% of its value.OKX Singapore CEO Gracie Lin commented, “The excessive leverage from October is still being resolved, so reactions to macro signals are slower than usual.”
Australian dollar fell 0.5% to $0.6644 on risk aversion. The pressure was further heightened by Australia’s November employment figures showing the sharpest decline in nine months. Swiss Franc Strengthens Swiss Franc Swiss Franc was supported by the Swiss National Bank keeping interest rates at 0% and stating that the agreement with the US to reduce tariffs improved the economic outlook. The Swiss franc traded at 0.7992 against the dollar and 0.9348 against the euro.
This outlook reveals that uncertainty and risk aversion continue to prevail in global markets.
