The dollar's value dropped to a 15-month low, signaling speculations of the Federal Reserve nearing the end of its rate hike cycle due to declining inflation. Reuters' report indicates that the dollar index, which measures the U.S. currency against six major rivals, reached its lowest point since April 2022 at 99.71 during early Asian hours. The ongoing decline in the dollar index suggests that this week may be the worst performance since November. Easing Inflation and Its Impact on the Dollar In June, U.S. producer prices experienced minimal growth, and the yearly increase in producer inflation was the smallest in almost three years, according to recent data released on Thursday. These findings were followed by modest consumer price growth, further supporting the notion that the world's largest economy is entering a phase of easing inflation. Currency strategist Carol Kong, from the Commonwealth Bank of Australia in Sydney, stated, "Markets are generally pleased with the lower inflation data, as it aligns with the resilient labor market, creating a narrative of a soft landing for the U.S. economy." However, Kong maintains the belief that the United States may face a recession later in the year due to the impact of past and potential future interest rate hikes. Market Expectations and Federal Reserve Outlook Current market expectations indicate a 92% likelihood of a 25 basis point hike from the Federal Reserve later this month, as shown by the CME FedWatch tool. However, no further hikes are anticipated for the remainder of the year. Recent data on weekly jobless claims and producer prices suggest a supportive environment for a soft landing, according to Ryan Brandham, head of global capital markets, North America, at Validus Risk Management.Federal Reserve Governor Christopher Waller expressed caution, stating that he is not ready to declare all clear on U.S. inflation and is in favor of additional rate hikes this year. Despite the encouraging trend of declining inflation, it is unlikely to be sufficient to sway the committee's decision. Global Currency Movements The Australian dollar experienced a slight decline of 0.16% to $0.688 following Michele Bullock's appointment as head of Australia's central bank, making her the first female governor as the bank undergoes a comprehensive reorganization. The euro reached a fresh 16-month high of $1.1229 during Asian trading hours before slightly retreating to $1.1222, while the pound traded at $1.3119, marking a 0.11% decrease for the day. Thursday saw the pound surpass $1.30 for the first time since April 2022. The Japanese yen strengthened by 0.23% to 137.71 per dollar, potentially achieving its most successful week against the dollar since January. Cryptocurrency Market Highlights Bitcoin experienced a marginal increase of 0.03% to $31,367.56, reaching near two-month highs of $31,818. Ethereum rose by 1.4% to $2,014.10. A U.S. judge ruled that Ripple Labs did not violate federal securities law by selling its XRP token on public exchanges.In summary, the dollar's decline to a 15-month low suggests that the Federal Reserve may be nearing the end of its rate hike cycle due to easing inflation. The market remains cautiously optimistic, while speculations of a U.S. recession persist. Global currency movements reflect the impact of these developments, while cryptocurrencies demonstrate mixed performances.

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Stay updated as the dollar reaches a 15-month low due to easing inflation, sparking speculation about a potential rate peak. Get insights into the evolving market dynamics.

Dollar at 15-Month Low as Inflation Eases, Fuels Speculation of Rate Peak

<h2>Key Highlights</h2> <ul><li>Federal Reserve officials indicate that the cycle of rate hikes is approaching its conclusion.</li><li>The dollar experiences a decline, reaching a three-week low against the yen.</li><li>The market's attention shifts to the release of U.S. inflation data on Wednesday.</li><li>Following the publication of inflation data, the Norwegian crown emerges as the top gainer in the foreign exchange market.</li><li>Chinese inflation data exerts pressure on the yuan, although it remains relatively stable compared to the dollar.</li></ul> According to reports from Reuters, the US dollar plunged to a three-week low on Monday following comments from Federal Reserve officials that reinforced market expectations of an imminent end to the tightening cycle by the US central bank. Despite Friday's data revealing the smallest job gains in 2-1/2 years, the Fed is widely anticipated to raise interest rates by another 25 basis points this month. The expected rate hike in July would come after a pause by the Fed in June. Various Fed officials, led by San Francisco Fed President Mary Daly, indicated on Monday that while the central bank may need to raise interest rates further to combat persistently high inflation, the current monetary policy tightening cycle is nearing its conclusion. In afternoon trading, the dollar index, which tracks the US currency against major peers, slipped 0.3% to 101.98, reaching a three-week low. The euro climbed to three-month highs against the dollar, touching $1.0997 before settling at $1.0995, reflecting a 0.2% increase. Against the yen, the dollar dropped to its lowest level since June 21, reaching 141.32 yen. It was last down 0.6% at 141.335. Following weaker-than-expected US nonfarm payrolls data for June, which missed market expectations for the first time in 15 months, the greenback slid nearly 1.3% on Friday. Erik Nelson, macro strategist at Wells Fargo in London, stated, "The weaker pressure on the dollar has been hard to reconcile from a relative rates and growth standpoint. U.S. growth has outperformed expectations, while Europe and China have underperformed. I think the U.S. economy is stronger than we give it credit for." While Friday's employment report highlighted consistently strong wage growth, market expectations of a further rate hike later this month remained intact. Anticipated rate cuts in 2023, which were once expected, now seem unlikely. Attention now turns to US inflation data scheduled for release on Wednesday, with expectations for core CPI to show a 5% annual increase in June. In other currency news, the Norwegian crown, which has been the second-weakest performing currency in the G10 this year, strengthened following data that revealed continued rise in core inflation in June, reaching a new record. Consequently, the Norwegian crown firmed against both the dollar and the euro. The dollar was last down 1% at 10.493 Norwegian crowns, while the euro dropped nearly 1% to 11.5363 Norwegian crowns. The Chinese yuan experienced a decline against the dollar due to weak inflation figures in the world's second-largest economy. Data released on Monday showed that factory-gate prices fell at the fastest pace in 7-1/2 years in June, while consumer inflation reached its slowest rate since 2021. These numbers fueled hopes for additional support measures from Chinese authorities. The US dollar remained relatively unchanged against the offshore yuan at 7.230. The weak Chinese data had a negative impact on the Australian and New Zealand dollars, often used as liquid proxies for the Chinese yuan. The Aussie dollar fell by 0.2% to US$0.6677, while the New Zealand dollar reversed losses to trade 0.1% higher at US$0.6215.

Find out the implications of the Fed's rate hikes as the US Dollar tumbles.

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Dollar at 15-Month Low as Inflation Eases, Fuels Speculation...

Fed's Rate Hikes: US Dollar Drops to Three-Week Low

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