On Tuesday, the US dollar reached a two-month high against major currencies, buoyed by expectations that the Federal Reserve may decrease interest rates modestly in the short future, while the yen edged closer to the critical 150 per dollar mark.
The dollar rose when Fed Governor Christopher Waller urged “more caution” on future interest rate cuts, citing recent economic statistics.
The dollar index, which compares the US currency to six rivals, was last at 103.18, just shy of 103.36, the highest level since Aug. 8, which it reached on Monday. The index is up 2.5% and poised to end its three-month losing streak.
The euro remained steady in early Asian hours, although it was near to its lowest level since August 8, which it reached on Monday ahead of the European Central Bank’s policy meeting on Thursday, when the central bank is expected to slash interest rates again.
A run of U.S. statistics has showed that the economy is strong and slowing just little, but inflation in September surged somewhat more than expected, forcing traders to decrease wagers on large rate cuts.
At its most recent policy meeting in September, the Federal Reserve began its easing cycle with a dramatic 50 basis point cut. Traders now estimate an 89% chance of a 25 basis point decrease in November, with 45 basis points of easing priced in for the year.
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