Dollar steadies after decline as traders await Fed minutes

The dollar edged higher on October 7 but remained below its level before the previous session’s decline, as pressure on European bonds eased and investors awaited Federal Reserve meeting minutes. The dollar index gained 0.03% to 101.94 after losing 0.27% in the preceding session.

The Fed was scheduled to publish minutes from September 15-16, when it increased rates to tackle inflation. Christopher Waller, Neel Kashkari and Alberto Musalem were also due to speak on October 7. Gavin Friend, a senior markets strategist at National Australia Bank, said softer inflation and employment reports had reduced the urgency for another increase.

CME FedWatch showed a 20.5% probability of an October increase of at least 25 basis points, compared with about 51% a week earlier. The probability of a December increase stood at 84.5%. Kansas City Fed President Jeff Schmid said the policy rate still needed to rise to bring inflation down.

The euro slipped 0.08% to $1.1249 after recording its biggest gain in seven weeks in the previous session. French bond yields fell after presidential candidate Marine Le Pen increased her proposed spending cuts to €140 billion from €125 billion if she wins power in 2027.

The yen weakened 0.19% to 158.43 per dollar despite new Bank of Japan policymaker Ayano Sato saying she supported raising rates in stages. Three people familiar with the central bank’s thinking said it may indicate in October that underlying inflation has approximately reached its 2% target.

Sterling fell 0.08% to $1.3262. The Australian dollar declined 0.04% to $0.6979, while the New Zealand dollar lost 0.07% to $0.5617.