Dollar Slides as Fed's Soothing Remarks Dampen Rate Expectations
The US dollar depreciated on Tuesday as investor confidence wavered amidst changes in the tone of Federal Reserve officials. Expectations regarding US and Treasury rates diminished following a more subdued stance from Reserve officials.
In contrast, the yen edged higher due to the Middle East violence, encouraging safe-haven assets, and stabilized at 148.34 per dollar. The Swiss franc also rose, reaching 0.9045 to the dollar.
The euro saw a 0.1% increase in early Asian trading, reaching $1.0580. Israel's shekel stabilized at 3.95 to the dollar, recovering from an eight-year low after the central bank pledged $30 billion in foreign exchange.
Investors brace for prolonged conflict post the weekend attack by Palestinian militants, which claimed over 1,500 lives. However, remarks from Fed officials pivoted sentiment, suggesting that the recent bond sell-off might negate the need for further Fed rate hikes.
Dallas Fed President Lorie Logan stated, "If longer-term rates remain higher because term premiums are higher, then there may be less need to raise the Fed funds rate."
Fed Vice Chair Philip Jefferson added that the central bank will need to "proceed carefully" due to recent rate hikes. Market expectations of a Fed rate hike this year dropped from over 40% last week to around 26% on Monday.
Market analysts are closely monitoring comments from officials like Fed Governor Christopher Waller today for insights into the Fed's policy trajectory, as mentioned by strategist Carol Kong of CBA.
The 10-year Treasury bond yield, which had been surging, fell over 13 basis points to 4.63% at Tokyo's opening on Tuesday due to reduced interest rates and safe-haven positioning after the Columbus Day market closure.
The pound held slightly firmer against the dollar at $1.2244. Against the Australian and New Zealand dollars, the greenback weakened slightly, with the Australian dollar rising 0.2% to $0.6420 and the Kiwi dollar up 0.2% to $0.6031.
China's return after a week-long holiday refocused traders on adjusting the daily trading range of the yuan, which has been notably steadier than market expectations for weeks.
Before the domestic opening, the yuan held overnight gains, trading just above the 50-day moving average at 7.2876 per dollar.
In contrast, the yen edged higher due to the Middle East violence, encouraging safe-haven assets, and stabilized at 148.34 per dollar. The Swiss franc also rose, reaching 0.9045 to the dollar.
The euro saw a 0.1% increase in early Asian trading, reaching $1.0580. Israel's shekel stabilized at 3.95 to the dollar, recovering from an eight-year low after the central bank pledged $30 billion in foreign exchange.
Investors brace for prolonged conflict post the weekend attack by Palestinian militants, which claimed over 1,500 lives. However, remarks from Fed officials pivoted sentiment, suggesting that the recent bond sell-off might negate the need for further Fed rate hikes.
Dallas Fed President Lorie Logan stated, "If longer-term rates remain higher because term premiums are higher, then there may be less need to raise the Fed funds rate."
Fed Vice Chair Philip Jefferson added that the central bank will need to "proceed carefully" due to recent rate hikes. Market expectations of a Fed rate hike this year dropped from over 40% last week to around 26% on Monday.
Market analysts are closely monitoring comments from officials like Fed Governor Christopher Waller today for insights into the Fed's policy trajectory, as mentioned by strategist Carol Kong of CBA.
The 10-year Treasury bond yield, which had been surging, fell over 13 basis points to 4.63% at Tokyo's opening on Tuesday due to reduced interest rates and safe-haven positioning after the Columbus Day market closure.
The pound held slightly firmer against the dollar at $1.2244. Against the Australian and New Zealand dollars, the greenback weakened slightly, with the Australian dollar rising 0.2% to $0.6420 and the Kiwi dollar up 0.2% to $0.6031.
China's return after a week-long holiday refocused traders on adjusting the daily trading range of the yuan, which has been notably steadier than market expectations for weeks.
Before the domestic opening, the yuan held overnight gains, trading just above the 50-day moving average at 7.2876 per dollar.
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