Dollar climbs ahead of Fed minutes; euro slides towards 17-month lows
TLT•The dollar index rose 0.64% to 102.49 as investors awaited Federal Reserve minutes, while the euro fell 0.83% to $1.1166. Markets put the chance of an October Fed rate hike at 21.6%, down from about 51% a week earlier.
1. Dollar gains before minutes
The dollar gained against major peers on Wednesday, supported by higher oil prices and safe-haven demand as Brent crude futures moved back above $100 a barrel. Investors awaited the minutes of the Fed’s September meeting, due at 2 p.m. ET, and remarks from policymakers.
2. Rate expectations shift
The chance of a Fed rate hike of at least 25 basis points in October stood at 21.6%, down from about 51% a week earlier. Markets priced in a 68.6% chance of a hike at the Fed’s December meeting. Recent comments from Fed policymakers were less hawkish following lower-than-expected inflation and jobs data.
3. Euro and yen move lower
The euro fell 0.83% to $1.1166, nearing last week’s 17-month lows, as French bonds faced renewed pressure over fiscal concerns. The yen weakened 0.09% to 158.265 per dollar, although Bank of Japan board member Ayano Sato said she supported raising rates in several stages.
