Dollar Declined as European Markets Opened on Wednesday
The dollar declined as European markets opened on Wednesday. In contrast, the Australian dollar pared gains rose following surprisingly strong inflation data, which raised the possibility of earlier-than-expected rate hikes.
Remarkably, currency markets have been generally quiet in recent sessions as investors wait for the U.S. Fed meeting next week.
Investors are also waiting for policy announcements from the European, Japanese, and Canadian central banks this week. These meetings will likely provide clues on the outlook for rates amid a backdrop of supply-side driven global inflation pressures.
The U.S. Dollar Index Fell by Less than 0.1% at 93.877 on Wednesday
Short-term U.S. Treasury yields soared overnight as investors bet that inflation would bring forward interest rate rises.
The risk-sensitive Australian dollar gained 0.2% at $0.7513, hitting as high as $0.7536 overnight. The rise came after data revealed that Australian core inflation sped to a six-year peak in September, beating the market. Notably, the data prompted an increase in short-term yields.
The Reserve Bank of Australia (RBA) meets on Tuesday next week, and market pricing is at odds with RBA policymakers’ insistence that there will be no rate hikes before 2024.
Bank of Japan should lower its economic assessment.
The greenback was down around 0.4% against the safe-haven Japanese yen, with the pair changing hands at 113.745.
The Bank of Japan (BoJ) meets on Thursday. It should lower its economic assessment, with markets betting on no rate hike in the foreseeable future.
The euro was up about 0.1% at $1.1605. The European Central Bank, which meets on Thursday, is likely to take a dovish stance.
The British sterling was down 0.2% versus the euro at 84.39 pence per euro. The U.K.’s budget forecasts will be revealed later in the session but shouldn’t impact the currency.
In cryptocurrencies, the dominant cryptocurrency was down 2% at about $59,114. Remarkably, Bitcoin hit an all-time high of $67,016.50 last week.
