The US dollar has remained steady since last week as investors assess dovish statements from Fed officials that have increased expectations for a rate cut in December, which should limit the currency’s gains.
At 9:50 AM, the US Dollar Index (DXY) stood at 100.149 points, down 0.04% since it opened early Tuesday trading in the Asian session.
The US currency, however, rose against the yen, as investors continue to watch for intervention measures from Tokyo to stem the decline in the Japanese currency.
Trading volume has decreased from usual due to a holiday in Japan and a shortened week ahead of the Thanksgiving holiday on Thursday.
The dollar continued a slight decline after Fed Governor Christopher Waller said on Monday that current data shows the US labor market is still weak enough to support another quarter-point interest rate cut at the central bank’s policy meeting on December 9–10.
The statement followed remarks by New York Fed President John Williams on Friday, who said the US central bank still has the opportunity to reduce interest rates “in the near term” without jeopardizing the inflation target.
After those comments, Fed fund futures raised the probability of a quarter-point rate cut next month to 80 percent, up from 30 percent previously, according to the CME FedWatch tool.
However, several regional Fed governors believe policy easing should be postponed until there is stronger evidence that inflation is truly on track to fall to the Fed’s 2% target, given that inflation levels remain high.
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