Dollar fell in European trade on Thursday against a basket of major rivals, extending losses for the seventh straight session and hitting a three-week trough following the Fed’s minutes.

The Fed’s minutes for the January meeting only confirmed the speculation that the June meeting will be the time of the first rate cut. 

Now investors await important US data later today on unemployment claims and the manufacturing and services sector to get better clues about the state of the economy. 

The Index

The dollar index fell 0.5% to 103.43, the lowest since February 2, with a session-high at 103.99.

The index lost 0.1% on Wednesday, the sixth loss in a row, and the longest streak of daily losses this year.

The Fed 

The Federal Reserve’s policy meeting showed that policymakers dismissed the odds of early rate cuts unless inflation proved to be moving sustainably towards 2%.

The minutes showed the Fed is seeking to achieve full employment targets alongside 2% inflation in the long-term, with ongoing uncertainty about economic outlook. 

As for monetary policy in the future, the minutes asserted the cautious and data-based approach by Fed officials as the priority is given to economic stability and inflation control. 

US Rates

Following the minutes, the odds of a 0.25% US interest rate cut in March tumbled to just 4.5%, while the odds for a May cut fell to 37%, as the odds for a June cut fell to 71%.

Traders now expect 75 basis points of total Fed rate cuts this year, down from 150 basis points in previous forecasts.

Important Data

Now investors await a batch of important US data covering the labor, manufacturing, and services sectors to get better clues on the likely path ahead for Fed policies. 

US unemployment claims are expected up slightly to 217 thousand in the week ending February 17 from 212 thousand. 

The US manufacturing PMI is expected at 50.5 last month, down from 50.7. 

Nvidia released their financial results this week, showing a record profit of $12.3 billion in the fourth quarter, up 770% y/y on massive demand for AI chips.

The gains are expected to accelerate even more in this quarter, and will put Nvidia on the map as one of the most valuable enterprises in human history.

Record Earnings 

Nvidia reported record earnings of $22.1 billion in the last quarter, with yearly earnings also hitting a record $60.9 billion.

The company attributed the gains to generative AI and accelerating computing services throughout the world.

Strong Outlook 

The company now expects its earnings this quarter to hit $24 billion, above market estimates of $21.9 billion.

Prices Surge

The stock price surged 6% in after-hours trading, with the stock up 36% so far this year. 

 The stock is expected to hit a new record high of $700 in today’s session. 

Euro rose in European trade on Thursday against a basket of major rivals, extending gains for the seventh straight session against the greenback and hitting a three-week high following bullish remarks by ECB officials, which hurt the odds of early ECB rate cut in April.

Now investors await a batch of important European data on services and manufacturing  this week, which will help determine the likely path ahead for policies. 

EUR/USD

EUR/USD Rose 0.6% to 1.0888, the highest since February 2, with a session-low at 1.0811. 

EUR/USD rose 0.1% on Wednesday, the sixth profit in a row, and the longest such streak of daily gains in 2024. 

European Remarks 

Belgian Central Bank Governor Pierre Wunsch said investors expect the ECB to start easing policies a short duration after an inflation slowdown, but it could be premature. 

He added it’s possible for ECB monetary policies to remain strict for longer than currently expected. 

European Rates

Following the bullish remarks and wages data this week, traders cut the odds of a 0.25% European interest rate cut in March. 

The odds are now on May as the likely date for the first ECB interest rate cut. 

Major Sectors

Investors now await a basket of important European data on services and manufacturing to gauge the state of economic performance. 

 The eurozone economy started improving in the fourth quarter of last week after shrinking in the third quarter due to weaker spending and lower Chinese growth. 

The Federal Reserve’s policy meeting showed that policymakers dismissed the odds of early rate cuts unless inflation proved to be moving sustainably towards 2%.

The minutes showed the Fed is seeking to achieve full employment targets alongside 2% inflation in the long-term, with ongoing uncertainty about economic outlook. 

As for monetary policy in the future, the minutes asserted the cautious and data-based approach by Fed officials as the priority is given to economic stability and inflation control. 

Last month’s meeting showed the Fed’s decision to maintain interest rates unchanged at below 5.5% for the fourth straight meeting.

The FOMC asserted its long-term and strategic policy goals, and noted that downward risks for employment and inflation have increased. 

Policymakers are expected to convene on March 19-20 for the next policy meeting, expected to maintain rates flat.