2023.12.1420:38:00UTC+00Dollar Loses Ground Against Major Counterparts

The U.S. dollar tumbled on Thursday, losing ground against its major counterparts, after the Federal Reserve left interest rates unchanged and hinted at three rate reductions in 2024.

The Fed decided to hold interest rates steady on Wednesday, and signaled three interest rate cuts next year, citing easing inflation and slowing economic growth.

Fed Chair Jerome Powell acknowledged that rate cuts will be a "topic of discussion" at upcoming meetings.

Investors also tracked policy announcements from the European Central Bank (ECB), Bank of England (BoE), Swiss National Bank (SNB) and the Norges Bank on Thursday.

The ECB's Governing Council, led by ECB President Christine Lagarde, held the main refinancing rate, or refi, at 4.5% on Thursday, in the final rate-setting session this year. The ECB lowered its inflation projections for this year and next.

The BoE left its benchmark rate unchanged at a 15-year high for the third straight time and retained its hawkish bias in contrast to the stance of its peer U.S. Federal Reserve that hinted at three rate cuts next year. The Swiss Central Bank also left its interest rate unchanged.

In U.S. economic releases, the Commerce Department's report said retail sales rose by 0.3% in November after slipping by a downwardly revised 0.2%. Economists had expected retail sales to edge down by 0.1%, matching the dip originally reported for the previous month.

Meanwhile, the Labor Department released a separate report showing first-time claims for U.S. unemployment benefits unexpectedly decreased in the week ended December 9th, falling to 202,000, a decrease of 19,000 from the previous week's revised level of 221,000.

Economists had expected jobless claims to come in unchanged compared to the 220,000 originally reported for the previous week.

The dollar index dropped to 101.77 and recovered a bit to 101.96 subsequently, but still remained well below the previous close of 102.87.

Against the Euro, the dollar slid to 1.0991, losing more than 1%. Against Pound Sterling, the dollar eased to 1.2766 from 1.2619.

The dollar was weak against the Japanese currency, fetching 141.86 yen a unit, compared to 142.89 yen a unit on Wednesday.

Against the Aussie, the dollar weakened to 0.6696, and against Swiss franc it slipped to CHF 0.8675. Canada's Loonie firmed as well against the dollar, strengthening to C$ 1.3408 from C$ 1.3520 a dollar, as oil prices surged higher.