The US dollar fell in European trade on Thursday against a basket of major rivals, expanding losses for the fourth straight session and plumbing a four-month low amid a heavy selloff.
Positive sentiment is dominating the market after German parties announced massive stimulus plans, while Donald Trump decided to exempt cars from the tariffs on Mexico and Canada.
Now markets await important US labor data, which could provide crucial pricing to the odds of a Fed rate cut in March.
The Index
The dollar index fell 0.3% today to 104.02, the lowest since November 6, with a session-high at 104.39.
The index lost 1.2% on Wednesday, the third loss in a row, and the largest since January 20 following disappointing US private sector data.
Positive Sentiment
The markets are awash with positive sentiment after German coalition parties announced plans to set up an infrastructure fund valued at 500 billion euros and change borrowing rules to boost military spending and growth.
Otherwise, the White House announced exemptions to some automakers from the 25% tariffs on Canada and Mexico for a month.
US Rates
New York Fed President John Williams said the US tariffs will likely push inflation higher, but he believes current interest rate policies are suitable and don’t require changes.
According to the Fedwatch tool, the odds of a 0.25% Fed interest rate cut in March stood at just 5%.
US Labor data
Now investors await important US labor data this week, with unemployment claims expected down to 234 thousand last week from 242 thousand in the previous reading.
