Dollar Slips as Fed Rate Hike Chances Drop to 35%
The US dollar has lost ground as investors reassess the likelihood of a Federal Reserve interest rate hike.
A weaker-than-expected inflation reading on the core PCE price index and Q2 GDP revision have reduced the chances of a Fed rate hike next month to 35%, down from 52% on Tuesday. However, signs of strength in the US economy, including revised higher Q2 GDP and stronger-than-expected ADP employment change and MNI Chicago PMI, are limiting dollar losses.
The euro has benefited from dollar weakness, with EUR/USD rising by 0.19%. German inflation data also showed a faster pace of expansion in September, which is supportive of the euro. Meanwhile, precious metals have gained as investors seek safe-haven assets amid uncertainty over interest rate hikes.