Dollar Recovers as Traders Await Fed Signals
The U.S. dollar recovered some of its losses on Wednesday as investors waited for the Federal Reserve’s September meeting minutes and speeches from policymakers for clues about the central bank’s next interest-rate moves.
The dollar index rose 0.16% to 102.07, reversing part of its previous decline. The euro fell 0.25% to $1.123, while the Japanese yen and British pound also weakened against the greenback.
Fed rate expectations remain divided
Markets have sharply reduced expectations for another Federal Reserve rate increase in October. Traders now see the probability of an October hike at around 20.5%, compared with roughly 50% a week earlier.
However, markets continue to expect another increase later in the year, reflecting ongoing concerns about inflation.
Federal Reserve officials have offered differing views on how urgently interest rates need to rise. Recent inflation and employment data have shown signs of moderation, but some policymakers continue to argue that additional tightening may be necessary to keep price pressures under control.
The minutes from the September 15–16 meeting are expected to provide further insight into that debate.
Euro gets support from French bond market
The euro had gained during the previous session after French government bond yields declined following proposals from far-right presidential candidate Marine Le Pen to reduce government spending and the country’s budget deficit.
The improvement in French bonds helped reduce some of the pressure that had recently weighed on the euro.
The dollar also benefited from safe-haven demand following renewed conflict-related developments in Yemen.
Yen remains under pressure
The Japanese yen weakened despite signals from the Bank of Japan that policymakers may continue considering higher interest rates.
Inflation in Japan is approaching the central bank’s 2% target, creating conditions for further policy tightening. However, the yen remains sensitive to the interest-rate gap between Japan and the United States.
Meanwhile, the Australian and New Zealand dollars weakened, while cryptocurrencies also declined, with Bitcoin falling 1.76% and Ether losing 3.3%.
Currency traders are therefore entering the latest session focused on the Fed minutes, upcoming central-bank speeches, bond yields and the latest geopolitical developments.
