Dollar hits 3-month low after Fed official signals rates may start to fall

News

Stay informed with free updates

The dollar hit a three-month low on Tuesday and US Treasury yields slid as investors grew increasingly confident that the US Federal Reserve will start cutting interest rates by mid-2024.

The US currency slid 0.4 per cent against a basket of six peers to trade at its lowest level since mid-August.

The decline accelerated after Christopher Waller, one of the Fed’s most hawkish policymakers, signalled that interest rates could start to fall “if we see disinflation continuing for several more months”. 

Fed chair Jay Powell said this month that the central bank was not thinking about rate cuts “now at all”.

But investors are betting that the Fed will cut interest rates by 0.25 percentage points by June in the first of four quarter-point cuts next year.

The 10-year Treasury yield, which moves inversely to price, fell 0.04 percentage points on Tuesday to 4.35 per cent. The slide takes yields to a level last seen before September’s Fed meeting, when warnings that interest rates were going to remain higher for longer triggered a global bond rout.

The dollar is now on course for its worst monthly performance in a year, having shed 3.6 per cent since the start of November.

Articles You May Like

Famine was stalking Gaza — then an aid convoy turned to deadly chaos
36% of homebuyers and sellers don’t know they can negotiate real estate agent fees. Here’s how to do it
Small mutual fund inflows, a stronger secondary close out month
Indiana tax windfall due to timing factors, officials caution
Britain to lead 2024 European real estate boom as international buyers eye opportunities, research says