The US currency remained near multi-week highs against major peers after climbing 0.5% on Tuesday following the latest inflation report. Rising accommodation and food prices prompted Fed voting members to voice renewed concerns over persistent price pressures. In response, fed funds futures priced in a 91.9% probability of a 25-basis-point increase in December, alongside a 9.1% chance of a half-point hike. Markets have also assigned better-than-even odds that policymakers will deliver another interest rate hike in January.
Key points
Persistent increases in food and accommodation costs are driving expectations for extende…: Persistent increases in food and accommodation costs are driving expectations for extended monetary policy tightening.
Traders have essentially ruled out any prospect of an interest rate pause at the Fed's De…: Traders have essentially ruled out any prospect of an interest rate pause at the Fed's December meeting.
Elevated bond yields and tightening expectations continue to weigh heavily on digital ass…: Elevated bond yields and tightening expectations continue to weigh heavily on digital asset markets.
Sources checked by our analysis pipeline: 1
The US dollar index, which measures the greenback's strength against a basket of six currencies, was steady at 102.22, closing in on its highest level since October 28.
The gauge traded up 0.5% on Tuesday after data showed US consumer prices increased by more than expected in October amid higher costs for food and accommodation.
"The rates market isn't simply pricing another hike," said Chris Weston, head of research at Pepperstone Group Ltd in Melbourne. "It's questioning how restrictive US monetary policy may ultimately need to become, and that's a far more consequential debate for risk assets."
The dollar held onto its gains against its major peers in early Asian trade. The euro and the British pound were flat at $1.1168 and $1.3345, respectively. Against the yen , the US dollar was unchanged at 158.715 yen. The Australian dollar was up 0.1% at $0.6870, edging back from a seven-month low, while the New Zealand dollar was flat at $0.5605.
Comments from voting members of the Federal Reserve's rate-setting committee signalling unease over high inflation have firmed expectations for further rate…
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