Traders Speculate on Fed’s Interest Rates, US Dollar Weakens Against Major Currencies
The U.S. dollar remained weak against most major currencies on Wednesday as traders speculated on the Federal Reserve’s stance on interest rates. The currency briefly gained some ground before the release of the minutes from the Fed’s latest monetary policy meeting, but faltered afterward.
According to the minutes, a majority of participants expect another interest rate hike to be appropriate. The projections made following the meeting indicated one more rate hike before the end of the year, although some officials believed that no further increases would be warranted.
The Federal Reserve stated that it would proceed with caution and base policy decisions on incoming economic information and its implications for the outlook and risks. The minutes further highlighted the consensus among participants that policy should remain restrictive until inflation is moving sustainably towards the Fed’s 2% objective.
In economic news, the Labor Department reported that the producer price index for final demand rose by 0.5% in September, surpassing economists’ expectations of a 0.4% increase. The annual rate of producer price growth also accelerated to 2.2% in September, higher than the previous month’s revised 2%.
Looking ahead, the Labor Department is scheduled to release its closely watched report on consumer price inflation for September on Thursday.
Despite a brief recovery, the U.S. dollar index fell to 105.72, down 0.1% from the previous close, after reaching a high of 106.01. Against the Euro, the dollar weakened to 1.0618, and it remained weak against Pound Sterling at 1.2315. On the other hand, the dollar firmed up against the Japanese yen, trading at 149.19 yen per unit. The Australian dollar, however, weakened against the dollar with the AUD/USD at 0.6413.
Against the Swiss franc, the dollar eased to CHF 0.9021, while against the Canadian dollar, it only saw a marginal increase to C$ 1.395.
Disclaimer: This article analyzes the recent trends in the currency markets based on publicly available data and market speculation. As with any financial news, readers should consider multiple sources and consult with a professional financial advisor before making any investment decisions.
