The dollar is on track for one of its most significant weekly declinesagainst major currencies in 2023. On Friday, the yen notably strengthened,trading below 150 to the dollar, amplifying concerns about a deterioratingglobal economic outlook.
This decline was triggered by cooler-than-expected US inflation datareported on Tuesday and Wednesday. The market recalibrated its expectationsfor the Federal Reserve’s potential rate cuts, causing a negative impact onthe dollar.
Currently, the greenback is facing its most substantial weekly drop sinceJuly, registering a 1.6% decrease over the past five days, marking itssecond-largest decline this year.
Although there was a brief moment of support for the dollar when datarevealed a marginal increase in US single-family homebuilding in October,the prevailing market driver remained inflation, keeping the dollar lowerfor the day.
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Bipan Rai, North America head of FX strategy at CIBC Capital Markets inToronto, commented on the situation, stating, “The spate of recent datapoints towards progress being made on the inflation front.” He added, “Itreally feels like the initial momentum now is for the dollar to move lower.”