Dollar slips to 2-1/2-month low as rate-hike fears fade; British Pound breaches $1.42

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Dollar slips to 2-1/2-month low as rate-hike fears fade; British Pound breaches $1.42

On Tuesday, the American currency tumbled for a fourth straight session in a row, hitting the lowest since late-February against most major and emerging market economies, as investors’ fears of a US Fed rate-hike in a near term seemed to have waned.

In point of fact, the American Dollar began to outpace most major currencies later last week, as investors remained fretted that a latest inflation spike might prod the US Fed to raise its benchmark borrowing cost much earlier-than-anticipated, however, followed by US Fed remarks last week that reaffirmed its stance on an accommodative monetary policy, the US Dollar kept faltering against most major and emerging market currencies as beforementioned.

On top of that, the US Treasury bond notes, which was moving in line with the greenback over recent past, had stalled on Tuesday, as investors remained more confident that the US Fed would not taper off its fiscal support for the economy despite a boom in inflation indicators.

US Dollar falls to 2-1/2-month lows ahead of FOMC Minutes

Citing statistics, in the day’s FX market wind down, the US Dollar Index measured against a basket of six major currencies on an average, fell 0.48 per cent to 89.74, the lowest level since late-February, while the bloc’s single currency euro shared among 19 member states in the eurozone, leapt 0.63 per cent to $1.223 and the British Pound surpassed $1.42 level for the first time since February 24.

Safe-haven Japanese Yen, in tandem, added 0.25 per cent to 108.89 yen per Dollar against its American counterpart. Meanwhile, addressing to a growing investors’ belief that the US Fed would keep monetary policy unchanged and might tolerate an inflation-surge on a temporary basis, a senior market analyst at Western Union Business Solutions in Washington, Joe Manimbo said, “The market has come around to the Fed’s expectation that inflation is set to rise over near term but will plateau and decline in the coming months…As long as the Fed maintains this very dovish policy stance, that’s going to leave the dollar vulnerable”.