The Dollar Edges Higher in Fear of a Rising Inflation

After Governor Christopher Waller stated that the Federal Reserve was not weakening its fight against inflation, the U.S. dollar stabilized on Monday amid dwindling expectations of a less aggressive interest rate hike.

The dollar was under pressure after a slight understatement of U.S. inflation on Thursday; it lost about 4% of its value in one week, its worst week in more than two and a half years. However, Waller claimed on Sunday that the inflation number from the previous week was only one data point” and that more comparable readings would be necessary to demonstrate that inflation was dropping conclusively. However, Waller added that the Fed may now consider increasing at a slower rate.

What Do Experts Think?

Carol Kong, a currency analyst at Commonwealth Bank of Australia (OTC: CMWAY), said the market got a little ahead of itself. She said that the market might anticipate further reality checks from Fed officials, which would benefit the dollar in gaining more gains. According to Kong, U.S. inflation would probably continue high and force the Fed to tighten monetary policy.

The U.S. 10-year yield increased six basis points to 3.87% after dropping to a month low on Friday, while the U.S. two-year yield, which measures expectations for rate movement, increased to 4.39%. Before the British Chancellor’s Autumn Statement on Thursday, when he should announce tax increases and budget reductions, the pound dropped. At $1.1787, the pound was down 0.4% after increasing by 4% during the previous two trading sessions.

After the collapse of the cryptocurrency exchange FTX, continuous unrest continued to pressure cryptocurrencies. FTT, the native token of FTX, was recently down 2.4% at $1.38, nearly doubling its monthly losses. Bitcoin decreased by 0.5%, dropping under $16,680. In response to Beijing’s decision to abandon the yuan’s ten-year peg to the dollar, the central bank increased its official guideline fixing by the most since 2005, sending the onshore Chinese currency to an almost two-month high.