Dollar Range-Bound Amid Dovish Fed Expectations
The US dollar traded within a narrow range against major peers on August 18th as markets continued to price in a dovish response from the Federal Reserve following softer economic data.
Data released in recent weeks has shown a slower-than-expected US economy, including unexpected job losses and mild inflation readings. This has led investors to scale back expectations of an interest rate hike by the Fed.
Market pricing for a September quarter-point hike flipped towards a near 70% chance of a hold after the latest economic data was released.
Eugene Epstein, head of structured products at Moneycorp North America, said: 'Current levels, particularly dollar-denominated pairs, are just reflecting the surprised dovishness we saw in the last Fed meeting or at least the interpretation of dovishness.'