NEW YORK- TheUS dollar slipped against a basket of currencies, as investors evaluated how much of the Federal Reserve’s expected move to hike rates this week and beyond was already priced in.
The dollar index hit a 20-year high last week on expectations the US central bank will be more aggressive than peers in tightening policy, with inflation running at its fastest pace in 40 years.
But investors are also questioning whether most of the Fed’s hawkishness is already factored in and the dollar’s bull run may be due for a pause.
“I think that so much good news for the US is priced in that there could be a buy the rumor sell the fact,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.
The Fed is expected to raise interest rates by 50 basis points and announce plans to reduce its $9 trillion balance sheet when it concludes its two-day meeting on Wednesday.
Fed funds futures traders expect the Fed’s benchmark rate to rise to 2.89 percent by year-end, from 0.33 percent now.
Comments by Fed Chairman Jerome Powell at the conclusion of the meeting will be scrutinized for any new indications about whether the central bank will continue to hike rates to battle rising price pressures even if the economy weakens.
The dollar index was last at 103.43, down 0.12 percent on the day, after reaching 103.93 on Thursday, the highest since December 2002.
Data on Tuesday showed that US job openings increased to a record high in March as worker shortages persisted, suggesting that employers could continue to raise wages and help keep inflation uncomfortably high. – Reuters
