The U.S. dollar has fallen to a two-month low as traders bet that interest rates in America have now peaked and are likely to decline in 2024.
The dollar index hit a low of 103.46 in European trading, its weakest level since Sept. 1 of this year, and extending a nearly 2% decline over the past week, which was the steepest weekly decline since July.
Currency markets have priced out the risk of further rate increases from the U.S. central bank after weaker-than-expected economic data, including a soft inflation reading for October.
Traders are now focused on how soon the Fed will cut interest rates, with futures markets pricing in a 30% chance that rates will start coming down as early as March 2024.
Minutes from the Fed’s latest meeting will be released on Nov. 21 and could offer some clues to what policymakers are thinking regarding the future direction of interest rates.
The British pound was little changed at $1.2467 U.S. after trading near a near two-month high against the greenback. The Euro currency last traded at $1.0926 U.S. versus the dollar.
China today (Nov. 20) left its benchmark interest rate unchanged, matching economists’ expectations.
The yuan currency, which has fallen nearly 4% against the U.S. dollar this year, continues to be pressured by a faltering economy in China.