The dollar tracked toward a second consecutive quarterly loss, as investors see U.S. interest rates close to peaking and expect the dollar’s yield advantage is in decline. | Reuters
It was steady at $1.0898 in Asia, while investors wait for Europe-wide inflation data due later in the day. Core personal consumption expenditures price index, the Federal Reserve’s preferred inflation measure, is also due.Through March, U.S. interest rate markets dramatically repriced the outlook and now see a roughly 40-percent chance that the Federal Reserve is finished with rate increases. Fed funds futures have priced rate cuts by year’s end.
“The saga must have an impact on both credit demand and supply and unless economic data recover very quickly, the end of the Fed rate-hiking cycle is surely much closer now, and the dollar remains way above long-term average levels in real terms,” they said, in reference to recent banking turmoil. Currency markets were in general steadier than stocks and did not reflect the wild volatility seen in bond trade, though the yen – seen as a safe haven thanks to Japan’s status as the world’s biggest creditor – is up 2.5 percent for the month.“This week we have a recovery in risk sentiment because we haven’t had any major bad news about Europe or U.S. financial institutions,” said Yujiro Goto, chief FX strategist at Nomura Securities in Tokyo.
The Australian dollar was steady at $0.6715 and is close to testing its 200-day moving average. It is also about 1.3 percent lower on the quarter.
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