Dollar Dips as Markets Eye Fed Signals for Rate Hike Clues

The US dollar held onto its losses on Wednesday as market attention shifted to upcoming Federal Reserve minutes and policymaker speeches for clues on future rate hikes. The euro saw its largest gain in seven weeks the previous day after French bond yields dropped, following promises from a leading presidential candidate to cut government spending.

The dollar index, which tracks the currency against a basket of others, edged up slightly to 101.94 after a 0.27% decline in the prior session. The euro dipped 0.08% to $1.1249, while the yen weakened 0.19% against the dollar to 158.43. Sterling also fell 0.08% to $1.3262.

Market expectations for a Fed rate hike in October have declined significantly, now standing at 20.5% compared to 51% a week ago. However, traders still anticipate an 84.5% chance of a hike in December. Fed officials have been mixed in their signals, with some advocating for further rate increases to combat inflation, while others suggest a more cautious approach.

In cryptocurrencies, bitcoin dropped 0.22% to $85,438.59, and ether fell 0.12% to $2,695.22. The Australian dollar and New Zealand dollar also weakened slightly against the greenback.