Dollar slumps as Fed cuts eyed; Aussie buoyant ahead of inflation data
By Rae Wee
SINGAPORE (Reuters) — The dollar fell broadly on Wednesday to hit its lowest against the yen in more than two months and languished near a three-month trough against its major peers, as expectations mount the Federal Reserve could begin lowering rates by early next year.
The Australian dollar held near a four-month peak while the New Zealand dollar scaled a roughly four-month top of $0.61495 in early Asia trade. Australian inflation data is due later in the day, followed by a rate decision from the Reserve Bank of New Zealand (RBNZ).
The greenback tumbled to 147.02 yen and pushed the euro back above $1.10 to last trade at $1.10025, after Fed Governor Christopher Waller — a known hawkish and influential voice at the central bank — on Tuesday flagged a possible rate cut in the months ahead.
«He's relatively hawkish, historically speaking, so if his attitude is turning a little bit more dovish, it sort of says that perhaps a general consensus of the board members is that rates have peaked and maybe could even be cut next year,» said Kyle Rodda, senior financial market analyst at Capital.com.
Market pricing currently shows a 40% chance the Fed could begin easing monetary policy as early as next March, as compared to a roughly 22% chance a day ago, according to the CME FedWatch tool.
Against a basket of currencies, the greenback slid to a more than three-month low of 102.60. The dollar index was eyeing a nearly 4% loss for November, its worst monthly performance in a year.
«We have become less constructive on the prospects for the U.S. dollar, as progress in reducing U.S. inflation suggests the risks are tilted toward earlier rather than later Fed easing,» said economists at Wells Fargo in a note. «Despite U.S.
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