The dollar fell against most major currencies on Thursday as the positive impact of the Federal Reserve’s aggressive comments faded and investors waited for more signals on the data front to confirm more major rate hikes to curb inflation.
Fed officials continued to resist the perception that US interest rates were nearing a peak. San Francisco Fed President Mary Daly and Minneapolis Fed President Neel Kashkari overnight expressed their determination to contain high inflation.
But the impact of the aggressive rhetoric on the dollar appeared to be easing as the currency moved into a more defensive mood as the London session progressed.
“Yesterday we had some aggressive comments, but maybe that’s not enough and investors will be looking for confirmation of data, especially tomorrow’s payroll number,” said ING currency strategist Francesco Pesole, referring to US jobs data.
“The effect on the dollar is easing today. Risk sentiment is also more bullish and it doesn’t look like markets are too concerned about the situation in Taiwan.”
The dollar index, which measures the greenback against six peers, stood at 106.18, down about 0.3 percent, but stayed above its one-month low earlier this week.
The euro rose 0.25 percent to $1,0195. The dollar was 0.2 percent stronger at 134.13 yen.
The strength of the dollar has yet to peak, according to a Reuters poll published Thursday. Seventy percent of those surveyed thought the dollar would not peak in this cycle, even after the dollar index hit its highest level in two decades in July.
Reuters Poll Graphic: US Dollar Outlook
Money market price up 50 bps at the Fed’s September meeting, and a roughly 44 percent chance of another massive 75 bps hike. The Fed raised interest rates by 75 bps at its June-July meeting.
Risk currencies also recovered as some nervous tension over House Speaker Nancy Pelosi’s visit to Taiwan faded.
The Australian dollar stood at $0.6968, up 0.6 percent. New Zealand’s currency was also 0.6 percent higher at $0.6309