US Dollar Struggles as Markets Scale Back Fed Expectations

US Dollar (USD) Remains Weak as Investors Pare Fed Bets

The US Dollar (USD) fluctuated near weekly lows yesterday, with the safe-haven currency being shaken by a volatile market mood.

USD also remained under pressure amid an ongoing pullback in Federal Reserve interest rate hike bets, after multiple Fed officials suggested that the recent surge in Treasury yields might negate the need for further tightening.

Fed bets could continue to influence the ‘Greenback’ today. A cooldown in producer prices could dent USD, but a hawkish tone in September’s Fed meeting minutes – due out this evening – may lend the US Dollar some support.

Pound (GBP) Wavers in Absence of Data

The Pound (GBP) was mixed on Tuesday as a lack of fresh economic data left the currency moving without a clear direction.

Adding to GBP’s uncertain movement, the International Monetary Fund (IMF) downgraded its UK growth forecast but also said that British interest rates may need to remain high for longer.

Turning to today, Sterling may face mixed trade once again amid an ongoing lack of GBP data.

Euro (EUR) Enjoys Negative USD Correlation

The Euro (EUR) enjoyed some support yesterday as the single currency benefitted from its negative correlation with a weakening US Dollar.

However, a lack of Eurozone economic data ultimately limited EUR’s upside.

This morning, Germany’s final consumer price index confirmed a sharp slowdown in inflation. This could pressure the common currency through today’s session.

Canadian Dollar (CAD) Slides as Oil Softens

The crude-linked Canadian Dollar (CAD) fell yesterday as oil prices softened. CAD’s positive trading relationship with USD added to the currency’s downside.

So far today, oil is ticking higher. Could this help the ‘Loonie’ gain ground through the session?

Australian Dollar (AUD) Falls as Iron Prices Decline

The Australian Dollar (AUD) initially rose last night before falling. AUD may have suffered some profit-taking after hitting a ten-day high against USD, while a drop in iron prices also could have weighed on the ‘Aussie’.

New Zealand Dollar (NZD) Hit by Profit-Taking

Likewise, the New Zealand Dollar (NZD) found initial success, hitting a two-month high against USD, before slipping lower as the overnight session continued.

Samuel Birnie

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