Dollar index sinks to 99 after Waller backs holding rates
Dollar index fell to 99 Thursday, near two-week lows, after Fed Governor Waller backed holding the federal funds rate if inflation improves. Oil gains moderated and markets cut month-hike odds.
The dollar index fell to 99 on Thursday, its lowest level in nearly two weeks, after comments from Fed Governor Waller signaled support for keeping interest rates unchanged if inflation continues to show signs of improvement. “If this continues in the data due over the next two weeks, I would be inclined to support holding the target for the federal funds rate at its current setting,” Waller said.
Also, a moderation in oil price gains offered some relief from concerns over mounting inflationary pressures.
Markets are currently pricing roughly a 50% probability of a Fed rate hike this month, down from around 70% earlier in the week, when a spike in oil prices heightened inflation concerns and following Fed Chair Warsh’s pledge at the Jackson Hole Symposium to keep inflation under control.
Investors now await Friday’s jobs report while the next key inflation readings are due next week.
The greenback was mostly lower against the yen, with traders raising bets on Bank?of Japan rate hikes.