US Dollar witnesses sharp fall
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The dollar is on track for one of its most significant weekly declines against major currencies in 2023. On Friday, the yen notably strengthened, trading below 150 to the dollar, amplifying concerns about a deteriorating global economic outlook.
This decline was triggered by cooler-than-expected US inflation data reported on Tuesday and Wednesday. The market recalibrated its expectations for the Federal Reserve's potential rate cuts, causing a negative impact on the dollar.
Currently, the greenback is facing its most substantial weekly drop since July, registering a 1.6% decrease over the past five days, marking its second-largest decline this year.
Although there was a brief moment of support for the dollar when data revealed a marginal increase in US single-family homebuilding in October, the prevailing market driver remained inflation, keeping the dollar lower for the day.
Bipan Rai, North America head of FX strategy at CIBC Capital Markets in Toronto, commented on the situation, stating, "The spate of recent data points towards progress being made on the inflation front." He added, "It really feels like the initial momentum now is for the dollar to move lower."
