Dollar steadies as Fed’s Waller cautions on inflation

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SINGAPORE — The U.S. dollar steadied

on Monday after Federal Reserve Governor Christopher Waller said

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the central bank was not softening its fight against inflation,

which made some investors think that the steep sell-off last

week was probably overdone.

A slightly cooler-than-anticipated inflation data on

Thursday put the greenback in a tailspin, with the dollar index

slipping 4% for the week, its worst week in more than two

and half years.

The dollar index, which gauges the greenback against

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a basket of six counterparts that includes the yen, euro and

sterling, rose 0.234% to 106.960 during Asian trade on Monday,

coming off the nearly three month low of 106.27 it touched on

Friday.

Global equities, meanwhile, soared as investors poured into

risky assets on hopes that peaking inflation means less

aggressive rate hikes from the Fed.

But Waller said on Sunday that the inflation print last week

was “just one data point” that would have to be followed, and h

other similar readings would be needed to show convincingly that

inflation was slowing.

Waller did add, however, that the Fed could now start

thinking about hiking at a slower pace.

“I think the market got a little bit ahead of itself,” said

Carol Kong, a currency strategist at Commonwealth Bank of

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Australia, adding the market can expect more reality checks from

Fed officials, which would help the dollar to recoup more

ground.

U.S. inflation will likely remain high and keep the Fed on

its monetary tightening path, Kong said.

U.S. consumer sentiment fell in November, pulled down by

persistent worries about inflation and higher borrowing costs, a

survey showed on Friday.

Sim Moh Siong, currency strategist at Bank of Singapore said

the Fed’s job was still not done and the central bank is

unlikely to want the equity market to rally too much or bond

yields to come off too much.

“If the financial markets get too buoyant, they will

probably growl louder to make themselves heard in terms of their

inflation message.”

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The U.S two-year yield, which reflects rate move

expectations, edged up to 4.41%, after diving as low as 4.29% on

Friday, while the U.S. 10-year yield was up 7 basis

points at 3.899%.

Elsewhere, cryptocurrencies remained under pressure from

ongoing turmoil after the fall of crypto exchange FTX. FTX’s

native token, FTT, was last down 7.6% at $1.31,

taking its month-to-date losses to nearly 95%.

Bitcoin fell 2.2% slipping below $16,000.

Sterling was swaying at $1.1747, down 0.74% on the

day, having risen 4% in the previous two sessions ahead of the

Autumn Statement on Thursday when Britain’s finance minister

Jeremy Hunt is expected to set out tax rises and spending cuts.

The Japanese yen weakened 0.60% versus the greenback

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at 139.63 per dollar, while the euro was down 0.47% to

$1.0303.

The risk-sensitive Australian and New Zealand

dollars slipped, giving up some gains made after China

moderated its zero COVID strategy.

On Sunday, Reuters reported that Chinese regulators have

told financial institutions to extend more support to property

developers to shore up the struggling real estate sector.

China’s yuan rose to a near two-month high against the

dollar on Monday, after the central bank lifted its official

guidance fixing by the most since 2005 when Beijing abandoned

the currency’s decade-old peg against the greenback.

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Currency bid prices at 0147 GMT

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

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Previous Change

Session

Euro/Dollar $1.0328 $1.0347 -0.18% -9.15% +1.0368 +1.0315

Dollar/Yen 139.1150 138.7350 +0.28% +20.96% +139.7300 +138.9200

Euro/Yen

Dollar/Swiss 0.9442 0.9413 +0.33% +3.54% +0.9448 +0.9425

Sterling/Dollar 1.1792 1.1835 -0.39% -12.83% +1.1852 +1.1767

Dollar/Canadian 1.3258 1.3251 +0.06% +4.87% +1.3308 +1.3240

Aussie/Dollar 0.6689 0.6707 -0.30% -8.01% +0.6720 +0.6668

NZ 0.6101 0.6121 -0.37% -10.91% +0.6127 +0.6070

Dollar/Dollar

All spots

Tokyo spots

Europe spots

Volatilities

Tokyo Forex market info from BOJ

(Reporting by Ankur Banerjee in Singapore; Editing by Ana

Nicolaci da Costa and Simon Cameron-Moore)