Dollar Rebounds as Markets Await Fed Signals on Rate Hikes
The US dollar regained some of its lost ground on Wednesday as traders awaited the release of the Federal Reserve's meeting minutes and speeches from its policymakers for clues on potential interest rate hikes. The euro reversed earlier gains after French bonds rallied on news that the leading candidate for the 2027 presidential election proposed significant spending cuts. Meanwhile, the Japanese yen weakened despite comments from a Bank of Japan board member supporting future rate increases.
The dollar index rose 0.16% to 102.07, recovering from a 0.27% drop the previous day. The euro fell 0.25% to $1.123, while the yen weakened 0.19% to 158.39 per dollar, and sterling lost 0.21% to $1.3244. Safe-haven demand for the dollar also increased following an attack on Aden International Airport by Yemen's Houthi rebels.
Expectations for a Fed rate hike in October have diminished, with the probability now at 20.5%, down from 51% a week ago. However, markets are pricing in an 84.5% chance of a hike in December. Fed officials, including Christopher Waller, Neel Kashkari, and Alberto Musalem, are scheduled to speak later in the day, along with the release of consumer credit data for August.
In cryptocurrencies, bitcoin dropped 1.76% to $84,115.47, and ether declined 3.3% to $2,609.57. The Australian dollar weakened 0.14% against the greenback to $0.6972, while New Zealand's kiwi sank 0.28% to $0.5605.