Breaking News
Investing Pro 0
Free Webinar - Decode the market's secrets! | Tuesday, May 30, 2023 | 01:00PM EDT Enroll Now

Dollar eases against euro as investors weigh rates outlook

Published Dec 07, 2022 09:45PM ET Updated Dec 08, 2022 11:36AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: U.S. one hundred dollar notes are seen in this picture illustration taken in Seoul February 7, 2011. REUTERS/Lee Jae-Won/File Photo
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio

By John McCrank and Amanda Cooper

NEW YORK (Reuters) -The dollar edged lower on Thursday against the euro as investors weighed the outlook for U.S. Federal Reserve policy against the chances that higher interest rates could lead to a recession.

The Fed, the European Central Bank and the Bank of England are all set to announce interest rate decisions next week as policy makers continue to tap the brakes on economic growth through higher rates to thwart stubbornly high inflation. Traders and investors will be on the watch for any signs that the Fed is getting ready to pause its hikes.

"A lot of the recent weakness in the dollar is because we're getting close to the end of the tightening cycle and exactly when they pause and how long they pause will determine what the dollar does," said Ed Moya, senior market analyst at Oanda.

"For now it seems that investors are positioning themselves for a little bit of dollar weakness, but there are still a lot of global risks on the table, so we are not going to see this be a one-way move lower for the dollar," he said.

The dollar was down 0.37% at $1.05435 against the euro at 9:45 a.m. EST (1545 GMT), and up 0.13% at $1.2228 versus the pound.

The Japanese yen edged up 0.07% to 136.405.

U.S. monthly consumer inflation is also due next week, one day before the Fed's policy meeting on Dec. 14, and could be pivotal in setting longer-term expectations for monetary policy.

"U.S. CPI is the one data release that seems to really matter for broader dollar direction at the moment and, until we got those central bank meetings and one key monthly U.S. data release, not a great deal is happening," said RBC currency strategist Adam Cole.

Meanwhile, oil prices have fallen below $80 a barrel for the first time since Russia invaded Ukraine in late February, as concern has mounted about how much a slowing economy will impact global energy demand.

Brent crude futures have dropped to around $78, almost halving from early March's 14-year high of $139.13. Gasoline prices at the pump in the United States, which in June hit a record $5.016, according to the American Automobile Association, are now at $3.329, down 0.4% on where they were at this point last year.

With energy prices having receded, market-based expectations for inflation have relaxed as well. The 10-year breakeven inflation spread, which subtracts the yield on an inflation-linked Treasury from that on a nominal 10-year note, is at just 2.27%, having peaked above 3% in April.

These two forces, together with diminishing expectations for the Fed to keep raising interest rates at the same aggressive pace, have knocked 6.2% off the value of the dollar so far this quarter.

This has put the greenback on course for its worst quarterly performance since the third quarter of 2010, when it dropped 8.5%, but for its worst fourth-quarter performance since 2004, according to Refinitiv data.

"The price action continues to highlight that market participants are becoming less concerned over upside inflation risks and more concerned over downside risks to global growth," Lee Hardman, currency strategist at MUFG, said in a note.

The 10-year yield was last up 4 bps at 3.44%, having neared is lowest in almost three months overnight.

Money markets show there is a 91% chance that the policy-setting Federal Open Market Committee will raise rates by half a point next week, and just a 9% chance there will be another 75 basis point increase. Rates are now seen peaking at just below 5% in May.

Dollar eases against euro as investors weigh rates outlook

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your profile, will be public on and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email