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© Reuters
By Peter Nurse
Investing.com – The US dollar lost positions at the start of trading on Tuesday in Europe as more Federal Reserve officials signaled a slowdown in interest rate hikes, and traders speculated on the possibility that rates are about to top out.
By 09:10 AM ET (0910 GMT), the , which tracks the currency against a basket of six other major currencies, was down 0.4% at 106.067, hitting new three-month lows.
Fed Vice Chair Lael Brainard was the latest Fed official on Monday to comment on the status of the central bank’s battle against the , echoing Fed Governor Christopher Waller’s remarks over the weekend about that interest rates must continue to rise to combat inflation, although probably at a slower pace.
“I think it’s probably going to be appropriate to move to a slower rate of hike soon, but what’s really important to note is … we have a lot more work to do,” Brainard said in an interview with Bloomberg in Washington.
Expectations are rising that interest rates will rise by just 50 basis points in December, a smaller rise than the 75 basis points in the last four meetings.
This change in stance means that the US dollar has peaked and will fall in 2023, according to Morgan Stanley, which expects the Fed to make its last rate hike in January 2023, with a rate cut in the fourth quarter. .
The bank believes the dollar index will decline to 104 by the end of next year, while the euro will outperform. The index fell 4% last week, its worst week in more than two and a half years.
All indications are that the US producer price index for October to be released today will rise by 8.3% in , a slower pace than in September, and 0.4% in .
Elsewhere, the pair is up 0.5% to the 1.1810 level, approaching the 2.5-month high recorded on Friday at 1.1855, after data pointed to a tight labor market.
The number of people filing in the UK only rose by 3,300 in October, less than feared, while growth in excluding bonuses accelerated in September on a year-on-year basis to 5.7%, rising to its fastest pace in more than 20 years.
Although profits remain well below the rate of around 10%, the figures indicate little slack in the economy that would allow it to halt its sequence of interest rate hikes.
The pair is up 0.8% to 1.0410, hitting new three-month highs, while the risk-sensitive 0.8% is up 0.6750.
The pair is down 0.3% to the 139.50 level as the yen benefits from a weaker dollar, even as data indicates the world’s third-largest economy is down at an annualized rate of 1.2%. in the third trimester.
The pair is down 0.5% to the 7.0355 level, while the yuan is supported by the fact that the People’s Bank of China decided to keep interest rates unchanged for the third month in a row, which offset the data that indicated weaker-than-expected industrial production and retail sales in October.
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