US dollar continues to slide

The U.S. dollar continues to wobble, hitting a three-month low during Asian hours before steadying. Currently standing at 103.2, up around 0.1% on the day and edging off the 103.15 touched in Asia trade, this marks the lowest point since Aug. 31.

November has proven challenging for the dollar index, facing a loss of over 3%, marking its worst performance in a year. Simon Harvey, head of FX analysis at Monex Europe, notes, “Markets have been looking to predict the next big theme – monetary easing, improved conditions for risk assets, and a weaker dollar – but, as seen this morning, that momentum seems to be waning.”

In the short term, attention is on the general sentiment in markets. The prevailing trend this month has been long equities and short the dollar.

The belief that the Federal Reserve’s rate increase cycle is concluding puts downward pressure on the greenback. U.S. rate futures suggest about a 25% chance that the Fed could begin cutting rates as early as March next year, increasing to nearly 45% by May, according to the CME FedWatch tool.

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Gold continues to flirt with 6 month-high

Traders now look to the U.S. core Personal Consumption Expenditures (PCE) price index for more confirmation that inflation in the US economy is slowing.

Across the board, stability in currencies such as the euro and the British pound continues, both hovering around their highest levels in about three months.

The kiwi momentarily hit its highest since Aug. 10 at $0.6114 before retracing. The Reserve Bank of New Zealand has its monetary policy meeting on Wednesday and is widely expected to keep interest rates steady at 5.50% for the fourth straight time.

Gold continues to flirt with yesterday’s 6-month high and if dollar weakness continues we could see bullion test all-time highs.