The US dollar slipped against its major counterparts on Tuesday amid some expectations that the Federal Reserve will slow the pace of tightening at an upcoming meeting to assess the impact of interest rate hikes on the economy.
Investors widely expect the Fed to raise its benchmark overnight rate by 75 basis points this week to a range of 3.75% to 4%, the fourth consecutive hike.

But for December, the Fed funds futures market is pricing in a 57% chance of 50 basis points amid hints from Fed officials that the pace of tightening may slow. However, that’s down from a roughly 70% chance last Friday.

The Bank of England (BoE) is also meeting this week and is expected to raise rates by 75 basis points. Traders expect the Bank of England to slow rates and raise rates by 50 basis points in December.

In afternoon trade, the dollar was down 0.4% against the yen at 148.20 yen. Sterling was up 0.1% at $1.1479 after falling more than 1% on Monday. The euro was slightly lower at $0.9878.

The US dollar index, which measures the greenback against six currencies, including the euro, pound and yen, was down slightly at 111.49.

The US dollar index has surged more than 15% this year as the Federal Reserve aggressively hiked interest rates, weighing down other currencies and weighing on the global economy.

As a result, investors cheered remarks and interviews from some Fed officials suggesting the central bank may raise rates slightly after Wednesday’s meeting.

Markets were also reminded Monday that global inflation remained stubbornly high when data showed euro zone prices hit record highs in the year to October.

The risk-sensitive Australian and New Zealand dollars recovered from one-week lows amid a broad recovery in market sentiment. The Australian dollar was little changed at $0.6397, while the New Zealand dollar was up 0.5% at $0.5840.

The Aussie fell earlier on the Reserve Bank of Australia’s decision to insist on slowing rate hikes by 25 basis points despite an unexpected surge in inflation to a 32-year high in the third quarter.

Among other currencies, the yuan fell to a near 15-year low against the dollar on Tuesday before recovering after the central bank pegged its official guidance rate at a lower key level of $7.2 for the first time since 2019. 2008. USD/CNH was last down 0.5% at 7.3033.