The US dollar falls as investors anticipate a slower pace of Fed hikes beginning in December.

Canada Global Tv: US dollar fell against major currencies on speculation that the Federal Reserve will signal a slower pace of tightening at its upcoming meeting to assess the impact of its rate hikes on the economy.
The Fed is widely expected to raise its benchmark overnight interest rate by 75 basis points (bps) this week, to a range of 3.75 percent to 4.00 percent, the fourth increase in a row.

However, the fed funds futures market has priced in a 57% probability of a 50-bps increase in December, despite Fed officials’ suggestions of a potential slowdown in the tightening pace. However, this was down from a roughly 70% chance last Friday.

According to Ivan Asensio, head of FX risk advising at Silicon Valley Bank in San Francisco, “there is some optimism that there could be a shift in the terminology following the FOMC (Federal Open Market Committee) meeting this week that would signal a deceleration could occur for the next time.”

This week’s meetings of the Bank of England (BoE) are similarly anticipated to result in a 75-bps increase. Traders therefore anticipate a slowdown and a 50 basis point rate increase from the BoE in December.

The dollar lost 0.4% to 148.20 in afternoon trading.

After falling more than 1% on Monday, the value of the pound increased by 0.1 percent to US$1.1479 (RM5.44). The euro decreased slightly to US$0.9878.

The US dollar index, which compares the dollar to six rival currencies such as the euro, sterling, and yen, was down marginally at 111.49.

Due to the Fed’s aggressive rate hikes this year, which have devalued other currencies and put pressure on the global economy, the dollar index has increased by more than 15%.

Therefore, remarks and interviews by certain Fed members that suggested the central bank could make lower hikes after Wednesday’s meeting have encouraged investors.

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