Dollar Slips Along With Rate Increase Expectations
14 September 2016, 15:20
By Ira Iosebashvili
The dollar edged lower Wednesday, as investors bet the Federal Reserve is unlikely to lift interest rates in coming months.
The Wall Street Journal Dollar Index, which measures the U.S. currency against a list of 16 others, was recently down 0.2% at 86.68.
With U.S. economic data uneven, fewer investors believe the Fed is gearing up to raise rates by the end of the year.
Fed-funds futures, used to bet on central-bank policy, on Wednesday showed investors and traders assigned a 52% likelihood to a rate increase in December, down from 55% a day before, according to CME. The chances of an increase at the Fed's September 20-21 meeting stood at 15%, the data showed.
Expectations of lower rates make the dollar less attractive to yield-seeking investors.
At the same time, some investors believe that the recent volatility in oil, equities and bonds could force investors into the dollar, buoying the U.S. currency.
"There is nowhere to hide when all major asset classes outside of cash are tumbling," said John Hardy, head of FX Strategy at Saxo Bank, in a note to investors. "The U.S. dollar should remain the chief benefactor if the bond and equity synchronized selloff worsens from here."
The dollar was recently up 0.1% against the yen at Yen102.61. The euro was up 0.2% at $1.1244.
In emerging markets, the dollar was up 0.9% against the Mexican peso to 19.25, its highest level since late June. It fell 0.4% against the Russian ruble to 65.15.
Write to Ira Iosebashvili at ira.iosebashvili@wsj.com
(END) Dow Jones Newswires
September 14, 2016 11:20 ET (15:20 GMT)
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