Dollar Slides on Weaker Rate Hike Expectations

The US Dollar has continued to trade on a softer footing this week due to scaled-back expectations for Federal Reserve rate hikes.

This downward trend is largely attributed to weaker labour data and a mixed United States Producer Price Index report, which have led to a decline in short-term US yields.

According to MUFG's Lee Hardman, the slowdown in private employment and wage growth over recent months has provided more leeway for the Fed to leave rates on hold.

The ongoing decline in short-term US rates has been providing a headwind for the US Dollar performance this month, but it has not yet triggered another leg lower.