US Dollar Declines as Markets Anticipate Less Hawkish Fed Stance

The U.S. dollar declined against its peers on Tuesday on signal that Federal Reserve rate hikes are already slowing the world’s biggest economy.

The dollar index, which tracks the greenback in relation to six major peers, dropped to 111.78, coming close to Friday’s low of 111.68, the lowest level since October 6.

The Fed is anticipated to increase interest rates by an additional 75 basis points on Wednesday of next week.

U.S. business activity shrank for a fourth consecutive month in October, according to S&P flash PMI data released overnight, weighing on the currency and providing further signs of an economy weakening in the face of high inflation and rising interest rates.

Reuters polled economists predict the pace of rate rises to drop to 50 basis points in December, matching money market expectations.