After falling on lower-than-expected inflation data the previous night, the dollar traded near its lowest levels in months against the euro and the pound on Wednesday. This fueled speculation that the Federal Reserve would announce a slower rate hike path. The U.S. central bank should raise interest rates by 50 basis points (bp) as it wraps up its two-day meeting on Wednesday, following four consecutive 75 bp hikes. Traders will then concentrate on the BoE and ECB meetings on Thursday. They might increase the rate to 50 bps. In the previous session, the euro reached an intraday high of $1.0673, a six-month high, but it was stable against the dollar at $1.0642.
The pound, which also reached a six-month high following the U.S. figures, was steady at $1.2376 after briefly falling when British inflation data revealed a more dramatic decline than anticipated. However, year-over-year inflation of 10.7%, versus a projected 10.9%, continues to be excruciatingly high for British consumers. In November, underlying consumer prices increased by the least in 15 months, according to a report from the Labor Department that was made public on Tuesday, falling short of forecasts for a second consecutive month.
The dollar, which measures the dollar’s value against six major currencies, dropped to a six-month low of 103.517 in the wake of the inflation data. To 103.91, it had slightly decreased. It has dropped by 9,101% since hitting a 20-year high in September as the expectation of high and rising U.S. interest rates, which fueled dollar gains, has started to fade. The dollar was down against the yen, trading at 135.27, down 0.2% after losing 1.5121%, and against the Swiss franc, at 0.92717, down slightly from Tuesday’s eight-month low of 0.9230.
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