The USD index continued its descent on Friday, shrugging off a slight rise in front-end U.S. Treasury yields and falling 0.44% to 103.91 into the week’s close. Longer-end yields moved lower, still supporting the current softening Fed rate expectations and sapping the dollar of the main source of strength throughout much of 2023, which had been fueled by high-for-longer U.S. rate expectations. The acceleration downward in Fed rate expectations has outpaced views concerning other major central banks that are seen as on the road to easing at some point, producing a torrent of dollar selling, especially after softer-than-forecast U.S. CPI. Oil’s 4% rally helped boost AUD, with lower global rate expectations also expected to be growth-positive. Outside of the dollar’s slide and oil rise, risk was relatively subdued as U.S. equity markets traded either side of flat on Friday. Gold and silver eked out slight gains amid the lower global rate outlook.
