The U.S. dollar held steady on Wednesday against a basket of peers as traders weighed the chances that the U.S. Federal Reserve would soon begin cutting interest rates.
Fed officials have been pushing back after last week's Federal Open Market Committee meeting saw three rate cuts penciled in for 2024, sparking a rally in financial markets.
Market participants are pricing in a 69% chance of the first cut happening at the Fed's March meeting, followed by a 63.3% probability of another in May, the CME FedWatch tool shows.
On Tuesday, Raphael Bostic, president of the Atlanta Federal Reserve, reiterated that he expected two rate cuts in the second half of the year, but added there was no "urgency" now.
The same day, Richmond Fed President Thomas Barkin said whether the central bank can deliver on forecasts of rate cuts depends on how the economy performs.
The dollar index inched up 0.13% to 102.25 , after sliding more than 0.3% the previous day and touching a four-month low of 101.76 last week.
The greenback's movement will depend on economic data supporting the rate cuts that have been priced in, said Rodda.
"The U.S. dollar is the inverse of the so-called 'everything rally,' which will beat on if the data confirms the need for cuts next year," he added.
The Fed's preferred measure of underlying inflation, the core Personal Consumption Expenditures (PCE) price index, is due this Friday, and could show whether inflation has slowed enough for the Fed to begin easing policy next year.
The euro eased 0.19% to $1.0958, while sterling was last trading at $1.2715.
The yen consolidated around 143.73 against the greenback after falling as low as 144.95 the previous day.
The Japanese currency had been trading around the 142 range on Tuesday before the Bank of Japan said it had left monetary policy unchanged and its chief, Kazuo Ueda, gave no hints of an imminent end to negative interest rates.
The Australian dollar was mostly flat at $0.6766, just off a fresh five-month high of $0.6777.
Source : Reuters
