· The dollar fell against most major currencies on Thursday, dropping to a two-week low versus the yen, pressured by the Federal Reserve's cautious U.S. economic outlook suggesting the central bank is near the end of its tightening cycle.
Over the last two months, the dollar index, which tracks the currency versus six major rivals, has fallen around 2.0 percent, on track for its worst two-month performance in a year.
"The Fed meeting had to be the definition of an about-face," said Mazen Issa, senior FX strategist at TD Securities in New York. "At the very least, the shift in stance augurs for continued U.S. softness."
He expects the dollar's downward path to be "more of a grind", rather than an "impulsive shift lower."
TD Securities has now changed its Fed forecast, Issa said. It expects the Fed to hike just one more time, instead of twice, and this would be the last for this cycle.
This afternoon, the dollar fell 0.14 percent against the yen to 108.87 after earlier falling to a two-week low of 108.51.
The greenback also fell 0.04 percent against the Swiss franc, to 0.9945 franc, and was down 0.31 percent against the euro, which traded at $1.1441.
The dollar index, meanwhile, was up .25 percent at 95.58, recovering from a three-week low.
Data showing that the number of Americans filing for unemployment benefits surged to near a 1-1/2-year high last week weighed on the dollar as well. But the numbers may have been skewed by the five-week shutdown of the federal government that has since ended. U.S. new ho me sales were upbeat, rising nearly 17 percent in November, but that did not impact the dollar.
· U.S. President Donald Trump said on Thursday he will meet with Chinese President Xi Jinping soon to try to seal a comprehensive trade deal as Trump and his top trade negotiator both cited substantial progress in two days of high-level talks.
Trump, speaking at the White House during a meeting with Chinese Vice Premier Liu He, said he was optimistic that the world’s two largest economies could reach “the biggest deal ever made.”
No specific plans for a meeting with Xi were announced, but Trump said there could be more than one meeting. U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin were invited to bring a U.S. negotiating team to Beijing around mid-February, with dates still pending.
· At the end of two days of high-level talks next door to the White House, Liu told Trump that China would make a new, immediate commitment to increase soybean purchases. An administration official later clarified the amount as a total of 5 million tonnes, effectively doubling the amount bought by China since resuming limited purchases in December.
· U.S. crude prices settled lower on Thursday as uncertainty about trade overtook bullish news about production cuts and U.S. monetary policy that drove prices higher early in the session.
U.S. President Donald Trump said on Thursday he would either strike a very big trade deal with China or “postpone” it, which sent oil traders scrambling to sell in the last day of trading for the March contract.
“There was a tendency to take profits if there was any sign of weakness, and President Trump’s suggestion that a deal with China could be postponed triggered a move lower,” said Phil Flynn, oil analyst at Price Futures Group in Chicago.
WTI crude fell 44 cents a barrel to settle at $53.79.
Brent crude futures for March delivery rose 24 cents to $61.89 a barrel.
Reference: CNBC, Reuters
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