The U.S. dollar remained steady against major global currencies on Thursday as investors positioned themselves ahead of key central bank decisions in the United Kingdom, Europe and Japan. Currency markets showed cautious movement as expectations around interest rate policy continued to shape trading sentiment, keeping the dollar index near recent highs.
Sterling stayed under pressure after an unexpected drop in UK inflation strengthened the case for a Bank of England rate cut. Data showing softer-than-expected November inflation has all but confirmed market expectations, with interest rate futures pricing in a near 100% probability of a quarter-point cut from the BoE. As a result, the pound hovered near $1.3373, following a notable decline in the previous session. Analysts suggested the weak inflation reading effectively sealed the deal for looser UK monetary policy.
The dollar index, which tracks the greenback against a basket of major currencies including the euro and yen, was little changed at around 98.35 after advancing earlier in the week. The euro remained stable at approximately $1.1743 as markets largely expect the European Central Bank to keep interest rates unchanged at its policy meeting.
Meanwhile, the Japanese yen showed modest strength, trimming earlier losses as the Bank of Japan began a closely watched two-day meeting. The yen strengthened slightly to around 155.45 per dollar as investors anticipated a possible rate hike. The BOJ is widely expected to raise short-term interest rates to 0.75%, marking the highest level in roughly three decades, driven by persistent inflation pressures linked to higher food costs.
In the United States, uncertainty continues to surround the Federal Reserve’s next move. Conflicting signals from Fed officials have offered little clarity on the timing of future rate cuts, while political uncertainty around the eventual successor to Fed Chair Jerome Powell has added another layer of market speculation. Recent comments from policymakers highlighted differing views on whether further easing is necessary amid signs of labor market softening.
In Asia-Pacific markets, the Australian dollar edged lower to around $0.6600, while the New Zealand dollar slipped to near $0.5763 despite data showing a return to economic growth. In the cryptocurrency market, bitcoin and ether posted modest gains as digital assets tracked broader risk sentiment.


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