Dollar Fluctuations Amid Fed Dovishness: What Investors and Businesses in Oman Need to Know
SINGAPORE — The US dollar found some support on Thursday amid a broad risk-averse mood in global markets but was unable to recover most of its earlier losses following a Federal Reserve outlook that was less hawkish than anticipated.
Investor sentiment took a hit after US cloud computing giant Oracle reported disappointing earnings, sparking renewed concerns that rising costs associated with artificial intelligence infrastructure may outpace profitability. This weighed on risk assets such as stocks and cryptocurrencies, tempering the dollar’s initial decline after Fed Chair Jerome Powell’s comments.
The Australian dollar fell 0.7% to $0.6629, while the New Zealand dollar dropped 0.44% to $0.5791. Bitcoin slipped below the $90,000 mark, and ether declined more than 4% to $3,197.15.
“Despite the Fed’s softer outlook, the market is still digesting excess leverage from October,” said Gracie Lin, CEO of OKX Singapore. She also highlighted that thin liquidity and ongoing geopolitical uncertainties were limiting market reactions to economic data.
At its two-day policy meeting, the Fed delivered a 25 basis point rate cut as expected. Analysts noted a dovish tone in the Fed’s accompanying statement and Powell’s press conference, leading investors to short the dollar and anticipate two interest rate cuts next year.
The euro briefly surged above $1.17, approaching a two-month high, before settling at $1.1686. The British pound touched $1.3391 briefly, later trading at $1.3360. The Japanese yen held steady at 156.07 per dollar. The dollar index ticked up 0.1% to 98.74 after hitting a three-week low.
Some strategists remain optimistic about the possibility of additional rate cuts in 2026, particularly if US labor market data weakens.
US Treasuries rose following the Fed’s announcement that it will begin purchasing Treasury bills starting December 12 to support market liquidity, initially targeting around $40 billion in purchases. The yield on the two-year note fell 3.5 basis points to 3.53%, while the 10-year yield declined 4 basis points to 4.1215%.
— Reuters
Special Analysis by Omanet | Navigate Oman’s Market
The Fed’s dovish stance and expected rate cuts in 2026 create opportunities for Omani businesses and investors to access cheaper US dollar funding, potentially boosting cross-border trade and investment. However, the risk-off market mood and tech sector concerns signal caution, urging entrepreneurs to pursue innovation with disciplined cost management in emerging sectors like AI. Smart investors should monitor currency fluctuations and liquidity shifts closely to optimize timing and reduce exposure to volatility.
