Dollar Slips as Investors Assess Fed Rate Outlook
The US dollar index edged lower to below 102 on Tuesday as investors evaluated the Federal Reserve’s monetary policy outlook ahead of its October 27—28 meeting. Market participants are also awaiting the latest PCE price index report, the Fed’s preferred measure of inflation. Markets currently assign an 83% probability to the central bank holding interest rates steady next week, while pricing in a 94% chance of a rate hike in December. On Friday, Fed Chair Kevin Warsh declined to indicate the likely outcome of this month’s FOMC meeting but noted that stronger-than-expected inflation had not changed his assessment of the US economy. Elsewhere, the euro recovered modestly as European governments sought to contain widespread unrest that turned violent over the weekend. In Japan, the yen weakened despite hawkish remarks from Bank of Japan Governor Kazuo Ueda, who indicated that underlying inflation was nearing the central bank’s 2% target.
The US dollar index edged lower to below 102 on Tuesday as investors evaluated the Federal Reserve’s monetary policy outlook ahead of its October 27—28 meeting. Market participants are also awaiting the latest PCE price index report, the Fed’s preferred measure of inflation. Markets currently assign an 83% probability to the central bank holding interest rates steady next week, while pricing in a 94% chance of a rate hike in December. On Friday, Fed Chair Kevin Warsh declined to indicate the likely outcome of this month’s FOMC meeting but noted that stronger-than-expected inflation had not changed his assessment of the US economy.
Elsewhere, the euro recovered modestly as European governments sought to contain widespread unrest that turned violent over the weekend. In Japan, the yen weakened despite hawkish remarks from Bank of Japan Governor Kazuo Ueda, who indicated that underlying inflation was nearing the central bank’s 2% target.