The Dollar Sank to A Three-Week Low

On Wednesday, the dollar edged closer to a three-week low against its main rivals. That’s because signs of a weakening US economy have fueled speculation about less aggressive Fed hikes.

Sterling hovered near a six-week high.

The euro was also trading near a six-week high, less than half a cent away from parity with the US dollar.

The dollar index, which compares the US currency to six other currencies, including sterling, the euro, and the yen, was little changed at 111.01, close to the previous session’s trough of 110.751, the lowest level since Oct. 5.

US home prices fell in August as higher mortgage rates dampened demand. Despite recent signs that Fed rate hikes are slowing the world’s largest economy, overnight data showed US home prices fell.

Traders and economists expect it to climb 75bps next Wednesday, but it will likely slow to 0.5% in December. US Treasury yields fell from 4.3381% in Tokyo last week to a multi-year high of 4.0833%.

The yen’s sensitivity to US interest rates put additional pressure on the dollar, which was steady at 147.99 after a 0.7% drop on Tuesday.

The dollar hit a 32-year high of 151.94 yen on Friday before falling to 144.55 yen over the weekend amid suspicions of intervention by the Bank of Japan.

Currencies

Sterling fell 0.21% to $1.14481 but remained close to Tuesday’s high of $1.1500, which was last seen on Sept. 15.

The euro fell 0.14% to $0.99545 after reaching its highest level since Oct. 5 at $0.9995.

Despite a brief surge to as high as $0.6422 after quarterly consumer inflation data narrowly exceeded economists’ expectations, the Australian dollar was 0.13% lower at $0.6386, putting some pressure on the Reserve Bank ahead of a policy meeting on Tuesday.

In the previous session, the Australian dollar reached its highest level since Oct. 7 at $0.6412. Cryptocurrencies were also up after sharp gains on Tuesday as the dollar fell. Bitcoin was 0.14% higher at $20,116, following a 3.93% increase overnight. Ether was up 0.45% at $1,466.31, following an 8.72% gain on Tuesday.