The dollar traded near a four-week high versus the euro on Thursday after signs of some stickiness in U.S. inflation reinforced expectations that the Federal Reserve would avoid a super-sized interest rate cut next week.
The dollar traded near a four-week high versus the euro on Thursday after signs of some stickiness in U.S. inflation reinforced expectations that the Federal Reserve would avoid a super-sized interest rate cut next week.
Meanwhile, a quarter-point rate reduction from the European Central Bank is widely expected later on Thursday, with investors anxious for hints on how soon the monetary authority will cut again.
Early on Wednesday, Bank of Japan board member Junko Nakagawa reinforced the central bank's tightening bias by saying low real rates leave room for further rate hikes.
As a result, traders essentially priced out the chances of a 50-basis point rate cut on Sept. 18, paring the odds to 15% versus 85% probability for a 25-bp reduction.
Persons:
Junko Nakagawa, Naoki Tamura, Tony Sycamore
Organizations:
Federal, European Central Bank, Bank of Japan, IG, ECB, Sterling, Swiss
Locations:
U.S