TOKYO- The dollar stabilized a little on Wednesday but remained near 2-1/2-month lows against a basket of currencies after minutes of the Federal Reserve’s last meeting did little to dislodge expectations that its rate-hike cycle was over.
The Fed minutes showed the central bank would proceed “carefully” and that “all participants judged it appropriate to maintain” the current rate setting.
Fed officials agreed they would only raise interest rates if progress in controlling inflation faltered, reiterating recent comments by policymakers that left the door open for more tightening even as markets have moved to price in cuts from early next year.
“The release of the FOMC November minute did little to sway the opinion that the Fed have reached their terminal rate,” said Matt Simpson, senior market analyst at City Index.
Markets are all but certain that the Fed will hold rates at their December meeting, while pricing in about a 30 percent chance of a rate cut as early as March, according to CME’s FedWatch Tool.
The dollar index which measure the greenback against a basket of currencies, was 0.12 percent higher at 103.65, pulling away slightly from the 2-1/2-month low of 103.17 it touched on Tuesday. The index is down about 3 percent so far in November and on course for its worst monthly performance in a year.
The euro last sat at $1.0908 after rising to its highest against the dollar since mid-August to $1.09655 on Tuesday.
Sterling was mostly flat at $1.2527, not far from a two-month high of $1.2558 touched overnight.
“We’re seeing signs that the dollar bearish move is running out of steam” and could be “due to bounce,” Simpson said, adding that the greenback has a tendency to weaken and then strengthen around the time of the US Thanksgiving holiday, which happens on Thursday. – Reuters
