Dollar Eases as Fed Outlook Mulled

The dollar index slipped below 106.5 on Tuesday, giving back some gains from the previous session as traders continued to assess the trajectory of Federal Reserve interest rate hikes, while haven demand triggered by widespread Covid protests in China started to ease.

The greenback gained sharply on Monday after St.

Louis Fed President James Bullard said the central bank still “got a ways to go to get restrictive,” reiterating that the policy rate needs to rise to at least 5% to bring down inflation.

New York Fed President John Williams also said that rates need to rise further and stay high through next year, while being open to a rate cut in 2024.

Still, the Fed is widely expected to slow the pace of tightening to 50 basis points in December after delivering four straight 75 basis point increases.

Investors also look ahead to a slew of US economic reports this week, as well as Fed Chair Jerome Powell’s speech on Wednesday.