The U.S. dollar maintained its strength, holds steady against the yen on Wednesday, nearing a two-week high. Traders anticipate U.S. inflation data, which may offer clues about Federal Reserve rate decisions. Market sentiment is closely tied to these numbers, as they could affect the pace of upcoming rate cuts.
Currently, traders assign an 85% probability of a quarter-point rate cut during the Fed's December meeting. Economists forecast a 0.3% rise in both headline and core consumer prices for November. If this projection holds, the dollar could strengthen further as investors reconsider the likelihood of aggressive rate cuts.
The Australian dollar hovered near a four-month low after the Reserve Bank of Australia (RBA) adopted a dovish stance earlier this week. The RBA's outlook has raised questions about the timing of potential rate cuts, leading traders to reduce their bullish bets on the Aussie.
This uncertainty also impacted the New Zealand dollar, which remained near a one-year low. Despite initial optimism after Beijing's pledge for more fiscal and monetary support, the Australian dollar's recovery was short-lived.
Traders are now watching for comments from RBA Deputy Governor Andrew Hauser, which could offer additional insights into the bank's policy direction.
The euro and the British pound showed little movement, trading at $1.052975 and $1.2777, respectively. Meanwhile, the Swiss franc held firm at 0.8830 per dollar ahead of the Swiss National Bank's policy decision. The Canadian dollar, however, weakened further, with one U.S. dollar buying C$1.4173.
Markets are closely monitoring the European Central Bank's decision, expected on Thursday. Investors anticipate at least a quarter-point rate cut, which could influence the euro's trajectory in the near term.
Market dynamics remain heavily influenced by central bank decisions and economic data. Traders should stay informed about key developments to adapt their strategies effectively.
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