By Eric Chia, Financial Markets Strategist at Exness.
The dollar stabilized on Thursday at multi-week lows following its decline after the Federal Reserve delivered a widely expected 25-basis-point rate cut but signaled a less hawkish stance than markets had anticipated. Treasury yields fell across the curve following the announcement, with the 10-year slipping to around 4.13%.
The Fed’s tone reinforced expectations for two rate cuts in 2026, while the institution’s forecasts signaled one possible reduction. Chair Jerome Powell’s remarks surprised some investors who were positioned for a more cautious message. The central bank also unveiled a plan to begin purchasing short-dated Treasury bills starting December 12, adding further downward pressure on yields.
Attention now turns to incoming labor data. Initial jobless claims are expected to rise from 191k to 220k, a move that would underscore signs of cooling in the labor market. Worse-than-expected figures could deepen pressure on both the dollar and yields, while a resilient print may help limit further losses ahead of next week’s broader data releases.