Dollar Weakens as Traders Unwind Fed Tightening Bets

The US dollar slid on Thursday as traders reevaluated their bets on monetary policy tightening by the Federal Reserve. The minutes from the Fed’s last meeting showed policymakers might not rush to raise rates as aggressively as expected. 

As a result, the dollar index, which tracks the performance of the greenback against six other currencies, declined 0.2% to 101.84. 

The market may be getting convinced that the Fed’s previous rate hikes may have already been enough to slow down the economy and the soaring inflation, thus further tightening at a rapid pace won’t be necessary. 

Elsewhere, the euro gained 0.37% against the dollar, while the sterling skyrocketed to a three-week high of $1.26165. The rise in the pound came before an announcement from British Chancellor Rishi Sunak on efforts to tackle the burgeoning cost of living.