Main world currencies opened Monday morning steady as traders braced for an extension of the US dollar's losses from late last week following the Fed's dialing down of hawkish rhetoric.
The euro was trading at $1.0727, while the dollar index remained the same at 105.07, which dropped over 1% last week, its biggest decline since mid-July, and it reached its lowest level in six weeks.
Global markets saw their most robust week in one year as anticipations that the Federal Reserve would stop hiking interest rates intensified.
A weaker US job report, weaker worldwide manufacturing data, and a decline in longer Treasury yields are among some other indicators that are hurting the dollar. Meanwhile, they are supporting rallies in the pound, the yen, and the Australian dollar, which are bouncing off 150 per dollar.
Market analyst Tina Teng of CMC Markets in Auckland stated that it's good that there is expectation for the Federal Reserve as well as other central banks to finish the cycle of rate hikes sooner rather than later.
She predicted that through November, the dollar would continue its downward path.
J.P. Morgan Securities analysts, meanwhile, sounded concerned.
They wrote that dollar bears would be a good way to control their enthusiasm, and this is due to the fact that the basis of USD strength has gradually weakened but has not entirely vanished, and over the medium run, it is probably going to reappear as the factor that supports the USD.
In addition, analysts at J.P. Morgan believe that, in addition to more signs of a weakening US economy, an ongoing dollar selloff requires improvements in the euro zone, the People's Republic, and other "still tenuous" regions.
That is supported by figures on inflation and GDP from Europe and the lattest manufacturing surveys in China.
Treasury rates fell sharply last week following softness in manufacturing and job reports from the US as well as comments by Federal Chair Jerome Powell about "balanced" risks. Additionally, the government reported fewer gains from long debt auctions than expected and lowered its refinancing forecast for this quarter.
In about two weeks, rates on 2-year notes have decreased by 25 basis points, and 10-year yields have declined by half a percent point and are currently at five-week lows of roughly 4.59%.
Futures markets are signaling a 90% possibility that the Federal Reserve had finished hiking rates and an 86% possibility that the first policy easing would happen as earliest as June.
The European Central Bank is expected by markets to drop rates by April with an 80% chance, and the Bank of England is easing in August.
The value of the yen decreased by 0.15%, closing at 149.58 per dollar. Teng of CMC Markets stated that the recent reversal of dollar and rebound of yen from the lows of last week indicated Japanese authorities may not need to meddle in the currency market.
Last week, the value of the yen against the dollar reached 151.74, approaching the low points from October of last year, which prompted dollar sales by the Bank of Japan.
At $1.2368, the pound was trading steadily. This week, Britain's fourth-quarter GDP report will be released. Though the value of it saw a significant increase last week, it has still declined by roughly 6% over the past four months.
The decline in the dollar supported gold at around $1,990, not too far from the previous 5-month peak of $2,009.
Bitcoin remained stable at $34,965 on the cryptocurrency market. The expected conclusion of cycles of tightening central bank policies has offered the risky asset some momentum.
The probability of further spot bitcoin exchange-traded funds, which would expand the market to include more investors, has also attracted attention from the cryptocurrency industry. Many companies have submitted such a product, although none have been accepted.