Global Currency Moves: Fed's Next Steps Under the Microscope

The U.S. dollar remained stable in a narrow trading range, buoyed by rising U.S. Treasury yields and expectations of an interest rate cut by the Federal Reserve. The Aussie and kiwi dollars surged on strong local employment data, while the euro and yuan remained steady ahead of central bank decisions.

The U.S. dollar exhibited stability on Thursday, maintaining a narrow trading range after reaching a two-week high in the previous session. Supporting this was an increase in U.S. Treasury yields alongside market expectations for the Federal Reserve to lower interest rates next week.

The Australian dollar experienced a strong surge following unexpectedly positive employment data, while the euro remained steady as markets awaited a monetary policy decision from the European Central Bank. The U.S. dollar retained a significant portion of the previous day's gains due to Wednesday's Treasury yield rise amidst widening budget deficit concerns.

The consumer price index report showed a 0.3% increase for November, marking the largest gain since April. There is a growing market consensus of a 98.6% likelihood of a 25 basis points rate cut at the Fed's mid-December meeting. Meanwhile, traders focused on China's economic policies and their potential influence on the yuan.

(With inputs from agencies.)