US Dollar Weakens Amid Reassessments of Fed Hike Bets
The US dollar weakened yesterday as markets reassessed their bets on Federal Reserve interest rate hikes. This softening was triggered by comments from a Fed official, who noted early signs of disinflation and expressed a willingness to keep rates steady.
The official's remarks contributed to a decline in two-year Treasury yields, which fell as much as 6 basis points intraday before recovering somewhat. The official cautioned that even if inflation accelerates slightly, it would not necessarily lead to tighter monetary policy.
A separate report from the Institute for Supply Management showed that US services expanded at their fastest pace since 2022, with businesses reporting strong growth in new orders and business activity. However, jobless claims edged up by 2,000 to 206,000, while the trade deficit widened to $88.6 billion.
The greenback's decline was also reflected in its performance against other major currencies, with the AUD/USD rising 0.45% and the NZD/USD increasing 0.5%. Meanwhile, regional equities were mixed, with the S&P 500 and Nasdaq Composite indexes rising 1% and 1.4%, respectively.