The dollar stayed close to a one-year low against major currencies on Tuesday.
In Asian trading, the U.S. dollar index, which measures the dollar against six major currencies, fell by 0.15 percent to 99.753.
Last week, the index had its worst performance of 2023. It stayed near its lowest level since April 2022, reaching a trough of 99.574 on Friday.
The euro peaked against the dollar to hit $1.1256, the highest level in 17 months. The British pound also saw gains, rising by 0.16 percent to $1.30945. It remained close to last week’s high of $1.3144, the highest since April 2022.
The market is anticipating a 25-basis-point rate increase from the Federal Reserve at its upcoming policy meeting this month, with investors believing that the rates may start declining as early as December.
In contrast, they also argue that the European Central Bank and the Bank of England still have more room for rate hikes.
Currency strategist Carol Kong from the Commonwealth Bank of Australia predicted that the dollar would continue to face selling pressure.
In other developments, the Japanese yen experienced a slight increase of approximately 0.2 percent against the dollar. It reached 138.46 per dollar.
Investors are awaiting the upcoming monetary policy meeting of the Bank of Japan (BOJ). They are looking for indications of whether the central bank will give up on its dovish policy.
The Australian dollar rose by 0.21 percent to $0.6831. This increase came after the release of the Reserve Bank of Australia’s (RBA) July policy meeting minutes on Tuesday.
The New Zealand dollar increased by 0.27 percent to $0.63425, recovering from previous losses alongside the Australian currency.
After an initial decline, the Canadian dollar quickly reversed its course and positioned itself near the top of the FX rankings, driven by a surge in oil prices.
The USD/CAD pair surpassed the previous day’s high of 1.3233, triggering stop orders, before dropping to 1.3171. Although Canadian CPI figures were lower than expected, their impact was short-lasting.
The onshore yuan achieved a slight increase and traded at 7.1696 against the dollar after the People’s Bank of China established a daily mid-point that exceeded expectations.
According to Kit Juckes, a macro strategist at Société Générale, there is a possibility of the USD/CNY weakening together. Juckes predicted that the yuan would reach a level of 7.40 against the dollar by the end of the year, a level not seen in approximately 15 years.
Other markets
The Dow Jones Industrial Average climbed by 1.06 percent in the stock market. The S&P 500 saw a gain of 0.71 percent and the Nasdaq Composite increased by 0.76 percent.
Crude oil prices rose by over one percent after China announced measures to bolster economic growth in the largest oil-importing country globally.
Brent futures experienced an increase of $1.13, reaching a settlement price of $79.63 per barrel.
The U.S. West Texas Intermediate (WTI) crude settled with a gain of $1.60, closing at $75.75.
U.S. gold futures concluded the trading session with a 1.2 percent increase, settling at $1,980.80 per ounce.