{"id":8552,"date":"2023-11-02T09:40:33","date_gmt":"2023-11-02T09:40:33","guid":{"rendered":"https:\/\/infundpros.com\/markets\/currencies\/dollar-lower-as-traders-see-us-rates-peaking-eyes-on-boe\/"},"modified":"2023-11-02T09:40:33","modified_gmt":"2023-11-02T09:40:33","slug":"dollar-lower-as-traders-see-us-rates-peaking-eyes-on-boe","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=8552","title":{"rendered":"Dollar lower as traders see US rates peaking, eyes on BoE"},"content":{"rendered":"
\n

By Samuel Indyk<\/p>\n

LONDON (Reuters) – The dollar fell broadly on Thursday, with risk-sensitive Asia-Pacific currencies leading gains as investors grew more convinced of a likely peak in U.S. interest rates after the Federal Reserve left them on hold.<\/p>\n

Focus now turns to the Bank of England and whether it conveys a similar message at today’s policy announcement. <\/p>\n

Fed Chair Jerome Powell left the door open to another hike, but with the funds rate target ceiling at 22-year high of 5.5% he said the risks of doing too much or too little were now balanced.<\/p>\n

Markets took that as a green light to stick with a sub 20% chance that rates will rise in December. Ten-year Treasury yields are down 23 basis points from Wednesday’s highs, equities rallied and risk-sensitive currencies bounced.<\/p>\n

“Powell had the opportunity to raise a bit of concern with the latest rise in short-term inflation expectations but he chose not to do that,” said Kristoffer Lomholt, head of FX research at Danske Bank.<\/p>\n

“There was a possibility of sending a much more hawkish signal but he chose not to and I think that’s what markets are reacting to.” <\/p>\n

The , which measures the currency against six major peers, was last down 0.1% at 106.41 and down by around 0.8% from Wednesday’s high. <\/p>\n

The euro rose 0.3% to $1.0598, the Swiss franc rose for a second day in a row and the yen was helped further from a one-year low to 150.155 per dollar.<\/p>\n

The yen has been struggling for traction, even as the Bank of Japan on Tuesday made another relaxation of its yield curve control policy. <\/p>\n

A fall to a one-year low of 151.74 per dollar and 15-year low of 160.83 per euro after the BoJ’s announcement had traders on watch for possible intervention to prop up the currency. <\/p>\n

“The important thing is the tempo of the fall,” Danske Bank’s Lomholt said. <\/p>\n

“That’s when we have seen them verbally come out and talk against the appreciation.”<\/p>\n

Kazuo Ueda, the central bank’s governor, will continue to dismantle its ultra-loose monetary policy and look to exit the decade-long accommodative regime sometime next year, sources told Reuters. <\/p>\n

Meanwhile, sterling crept 0.2% higher to $1.2173 and slipped to 87.14 per euro in anticipation of rates being held at high levels.<\/p>\n

Markets price an almost 90% chance the Bank of England keeps rates on hold at a 15-year high later on Thursday, but have not fully priced a rate cut until September 2024 — well after cuts are expected to have begun on the continent.<\/p>\n

“Pricing is reflecting the view that BoE rates will have to remain on ‘Table Mountain’ for some months given the UK’s inflation risks,” said RaboBank FX strategist Jane Foley.<\/p>\n

“On the assumption that the BoE indicates … that rates are set to remain on hold for some months, sterling is likely positioned to win back a little ground versus the euro.”<\/p>\n

The Australian dollar, which jumped 0.9% on Wednesday, was up and another 0.6% on Thursday to touch a three-week high of $0.6439. The New Zealand dollar hit a two-week peak of $0.5896. <\/p>\n

, sometimes traded as a proxy for risk-taking, broke above $35,000 for the first time since May 2022. <\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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