The opening of the December trading curtain was marked by a dip in the US dollar trade as a result of the dovish remarks of the Chairman of the Federal Reserve (Fed) Jerome Powell.
As expected, Powell finally confirmed that a smaller interest rate hike is likely to be implemented soon.
Speaking at the Brookings Institution in Washington early this morning, Powell said he sees the central bank in a position to reduce the size of rate hikes as soon as next month.
Even so, he also warned that the fight against inflation is not yet over and there is no indication of how much rates will need to be raised and how long the tightening will last.
Investors are now raising expectations for a 50 basis point hike in Fed interest rates at the upcoming December 13-14 policy meeting.
Following Powell's remarks, the dollar index plunged to a 3-month low of 105.62 against most major currencies.
Prior to Powell's speech, investors had watched the release of US private sector ADP employment data which unexpectedly showed a decline in October.
The market next received a shock from the US gross domestic product (GDP) data which rose 2.9% from the initial estimate of 2.6% in the third quarter.
This reading should provide support for the US dollar but following Powell's statement, the king of the currency sank lower.
Following the fall of the US dollar, most major currencies surged higher which saw the Aussie and New Zealand dollars among the best performers in the market.
Both currencies were also supported by improved sentiment following news of restrictions being eased in Zhengzhou and Guangzhou despite the government's efforts to contain new infections.
The euro and pound also strengthened with a sharp recovery from the weakest levels recorded before Powell's speech.
