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The safe-haven U.S. dollar eased against peers on Tuesday amid signs Federal Reserve rate hikes are already putting the brakes on the world’s biggest economy, while risk sentiment improved with Rishi Sunak about to become Britain’s prime minister.
Sterling edged toward this month’s highs, while the euro threatened to hit $0.99 for the first time since Oct. 6 ahead of Thursday’s European Central Bank (ECB) policy meeting.
The yen held firm on the stronger side of 149 per dollar following two consecutive days of suspected Bank of Japan (BOJ) intervention straddling the weekend.
A retreat this week in long-term Treasury yields also helped support the Japanese currency, but the policy background for yen weakness is likely to be put in stark relief in coming days: the BOJ is expected to stick to monetary stimulus on Friday, while the Fed is likely to raise rates by another 75 basis points on Wednesday of next week.
The dollar index, which measures the currency against six major peers, eased to 111.78, taking it close to Friday’s low of 111.68, the weakest level since Oct. 6.
The greenback softened after S&P flash PMI data overnight showed U.
