Greenback is powered by Fed rate expectations

26 October, 2016

On Wednesday, the US dollar was backed by hopes that American interest rates will edge up by the year-end. It stood flat during Asia trade, just below a nine-month high reached overnight, while the Australian dollar earned as inflation data doused the probability of a rate drop there.

In Australia, consumer prices managed to rebound by more than forecast the previous quarter, while the annual pace of core inflation rose for the first time a year, thus leading traders to price out almost any likelihood of a near-term drop in interest rates.

The Reserve Bank of Australia holds its monthly policy gathering next week and it’s supposed to keep rates at a record minimum of 1.5%.

The Aussie leapt to $0.7709 from $0.7645 before the news. Last it rose 0.5% on the day at $0.7684.

The common currency stood still at $1.0890, having slipped to an almost eight-month minimum of $1.0848 on Tuesday.

Against the Japanese yen, the greenback stood at 104.24, quite flat on the day, though not far from a roughly three-month peak of 104.87 yen achieved overnight during American trading.


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