The dollar index, which compares the greenback with a basket of six leading currencies, fell 0.1% to 104.29 units.
The dollar, which has gained 9% this year, has lost some of its shine since investors began betting the Fed might slow the pace of rate tightening after another 75 basis point hike in July. Traders now expect them to peak in March at around 3.5% and then drop almost 20 basis points by July 2023.
This reconsideration sent yields on 10-year Treasury bonds to a two-week low, while the dollar index is down 0.4% for the week.
However, for now, the Fed chairman, Jerome Powell, emphasized the “unconditional” commitment of the central bank to control inflation. Central bank Governor Michelle Bowman also supported increases of 50 basis points for the “next” meetings after July.
“The revision of prices in the market … has slowed down the dollar, but a countervailing force is the risk of a global recession. The Fed is practically on autopilot. Until they take their foot off the brake, the weakness of the dollar will be limited,” said Stephen Gallo, a strategist at BMO Capital Markets.
The and in, sensitive to changes in US bond yields, was up 0.1% to around 134.9 per dollar, poised to break a three-week losing streak during which it fell to successive lows of 24 years above 136 yen.
The euro added 0.2%, following Thursday’s 0.4% decline triggered by weaker-than-expected June PMI figures and after Germany triggered the “alarm phase” with its plan to use gas supplies from emergency.
Source: Ambito
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