Forex News: U.S. Dollar Slips As Bets On Federal Reserve

U.S. Dollar Slips As Bets On Federal Reserve Rate Hike Decline

(RTTNews) - The U.S. Dollar value turned lower on Thursday amid reversal in the U.S. Federal Reserve's rate hike expectations from yesterday's 14% to nearly 7%. The shift overshadowed the safe-haven demand tied to concerns over high inflation that surfaced after New York Times reported possible fresh attacks on Iran by the U.S. in November.

Today, the U.S. Dollar Index DXY, which measures the Greenback against a basket of other major currencies, was last seen trading at 101.64, down by 0.14 (or 0.14%).

While against the Euro, the USD was trading at 1.121, up by 0.16%, against the GBP, the USD was trading at 1.339, down by 0.04%.

Against the USD, the Japanese Yen was trading at 156.819, up by 0.83%, the Swiss Franc was trading at 0.820, up by 0.44%; and the Canadian Dollar was trading at 1.401, up by 0.22%.

Against one unit of Australian Dollar, the USD was trading at 0.701, up by 0.12%.

The U.S. Federal Reserve is set to announce the interest rates next week.

According to the CME Group's FedWatch Tool, currently investors are betting on a 7.20% chance of a 25-basis-point interest rate hike by the Fed on October 28 while the odds on the rates being held at the current level stand at 92.80%.

Traders have substantially lowered their bets on a rate hike by the Fed in October.

The odds stood around 14.90% yesterday and this reversal is bearish for the U.S. dollar.

Today, the data from the U.S. Labor Department showed that for the week ending October 17, the initial claims for unemployment benefits declined by 6,000 to 194,000, below market expectations of 200,000 and down from a revised 200,000 of the previous week. The numbers indicate that employers are still holding on their workers.

However, the continuing jobless claims increased to 1,728,000 for the week ending October 10 from 1,703,000 of the previous period, hinting that workers are finding it difficult to find another job.

Overall, the results do not show any sharp decline in the employment sector.

Yesterday, citing U.S. officials, the New York Times reported that the U.S. and Israel are preparing to renew strikes on Iran after the mid-term elections in the U.S. are over in the first week of November.

The operation could be brief but intense and may target Iran's energy infrastructures, nuclear facilities, and missile and drone arsenal.

The report added that forces from both the nations have commenced practice strike maneuvers. The news re-ignited concerns of higher inflation in the near-term driven by supply disruptions in the Middle East.

Tempering the fears of war, at a rally in South Carolina yesterday, U.S. President Donald Trump stated that the U.S. could end its war with Iran, but he stated that the U.S. prefers a lasting settlement rather than a temporary peace agreement.

Fears surrounding the enormous spending on Artificial Intelligence by tech heavyweights returned to the U.S markets.

Instagram parent Meta, which is spending heavily on its AI plans, declared strong earnings but the cost of insuring the company's debt against default has expanded to new highs.

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