LONDON, July 28 — The US dollar slumped to a three-week low versus the Japanese yen and struggled against its other major rivals today as markets ramped up bets on a softening in the pace of rate hikes.
The dollar’s weakness was the most prominent against the yen with the greenback slumping nearly 1 per cent versus the Japanese unit to hit its lowest since early July at ¥135.10 . The yen was the primary recipient of the widening interest rate differential trade between the United States and its global peers.
“It is still too soon to draw any firm conclusions and the next move will depend on incoming data.” Markets have already ramped up bets of a softening in future US interest rate hikes with futures now assigning a 65 per cent probability of a 50 bps hike in September from 50 per cent yesterday, according to CME. Bets of a 75 bps hike have been pared back to 35 per cent from 41 per cent.
The euro, which is the most heavily weighted currency in the index, was little changed at US$1.02045 , following a 0.82 per cent jump overnight. Sterling was 0.05 per cent higher at US$1.21640, after rallying 1.06 per cent yesterday.
Source: Financial Digest (financialdigest.net)
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