Rate cut anticipation hurts USD

The US dollar weakened on Tuesday as traders anticipated a cut in interest rates by the Federal Reserve later in the day, with rate futures traders in Chicago predicting a 64 percent chance that the Fed will cut US interest rates by a quarter of a point.

The expectation was that the Fed will cut rates not only today but again when it meets at the end of January.

By early afternoon trade in New York, still before the Fed’s announcement on interest rates, it took ¥111.7450 to buy a dollar, while the dollar traded at $2.0384 to the pound and at $1.4702 to the euro.

Sterling benefited by news from the Office of National Statistics in London that goods trade gap declined to £7.1 billion in October from £8 billion in September.

It took ¥227.7810 to buy a pound in New York trade, while the euro traded at €1.3864 to the pound.

The euro weakened early in the session on a decrease in investor confidence in Germany, but made a comeback versus the US dollar on the interest rate expectations.

The Swiss franc weakened again as investors continued to seek out risk.

In early afternoon trade in New York the Swiss franc was trading at SFr1.1331 to the greenback, at SFr1.6660 to the euro and at 2.3098 to the pound.

Story link: Rate cut anticipation hurts USD