The US dollar strengthened against the euro and sterling today after slipping to multi-month lows, as expectations of a less aggressive Federal Reserve rate hike faded with traders saying markets were overreacting to moderate weakness in US inflation.
Last week, the US dollar index fell 4%, marking its worst week in more than two and a half years, after data showed U.S. consumer prices. rose less than expected in October. With this, increasing expectations that the Fed will reduce the large interest rate hikes are getting higher.
Still, Governor Christopher Waller said on Sunday that inflation was "just one piece of data" and that other similar readings would be needed to show convincingly that inflation is slowing.
Waller added, however, that the Fed could now start thinking about implementing slower rate hikes. The euro slipped 0.6% against the dollar to trade at $1.0284, after strengthening to a three-month high during Asian trading hours.
ECB board member Fabio Panetta said on Monday that the central bank must continue to raise rates but should avoid being too aggressive as it could destroy productive capacity and plunge the economy into recession.
On the data front, figures showed on Monday that euro zone industrial production rose more than expected in September, and output for August was also revised up, although economists said that may have been partly due to producers loading up production ahead of winter energy-related disruptions. this.
Sterling fell ahead of the British Chancellor's autumn statement on Thursday, where he is expected to set out tax rises and spending cuts.
Cryptocurrencies remain under pressure from the ongoing turmoil following the collapse of crypto exchange FTX. The FTX token is worth just $1.3, down 94% in November, while Crypto.com's Cronos token has dropped 50% in the past week to $0.06.
