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Dollar is trading for weekly losses as investors brace for a sluggish rate hike by the Fed

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SINGAPORE, Nov 25 (Reuters) – The dollar was near a three-month low and headed for a weekly loss on Friday as investors believed the Federal Reserve would slow monetary policy from December. Dominated and stayed. Mood happy

Overnight trading was lower due to the Thanksgiving holiday in the United States, although most currencies extended gains against a softer greenback before turning slightly lower in early trading in Asia.

Sterling rose more than 0.5% overnight to last trade at $1.21125, close to a three-month high of $1.2153 in the previous session and on track for weekly gains of nearly 2%.

The Japanese yen rose almost 0.7% overnight and was eventually bought at 138.60 per dollar.

Minutes from the Fed’s November meeting, published earlier this week, showed that a “substantial majority” of policymakers agreed that it would “probably be appropriate” to slow the pace of rate hikes. The comment that made the greenback tumble.

The Fed’s aggressive rate hikes and market expectations about how high the central bank could take them were a big driver for the dollar’s 10% gain this year.

Ray Attrill, head of FX strategy at National Australia Bank, said: “We still have a third consecutive day of positive risk sentiment.

Against a basket of currencies, the US dollar index stood at 105.94 after hitting a three-month low of 105.30 last week. This was on track for a weekly loss of about 1%.

Risk sentiment also received some support from a survey that showed German corporate morale rose more than expected in November.

Policymakers at the European Central Bank (ECB) fear that inflation in the eurozone will stall, reports from the October meeting showed. However, markets are now expecting a modest 50 basis point move into the December meeting. read more

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The euro fell 0.06% to $1.04045, but last week held near $1.0481, its highest level in four months.

“We have the euro area inflation numbers next week, so I think they will be a big test of market prices… if we got another positive surprise on that, I think that is on the agenda.” 75 bp comes back.” said Atril.

The Aussie fell 0.17% to $0.6753 after gaining more than 0.4% overnight. The kiwi fell 0.19% to $0.6252, but was not far from its quarterly high in the previous session.

The New Zealand dollar was on track for weekly gains of more than 1.5%, aided by the Reserve Bank of New Zealand’s 75 basis point interest rate hike earlier this week and its aggressive rate outlook. read more

In China, markets also closely monitored a looming reduction in banks’ reserve requirement ratios (RRR).

State media quoted a cabinet meeting as saying that China would use a timely reduction in banks’ RRR, along with other monetary policy tools, to keep liquidity amply adequate.

“We think the PBOC (People’s Bank of China) can cut the RRR by 25 basis points for most banks in the coming weeks (or even days), said Nomura analysts.

“That said, the RRR is likely to have only a limited positive impact as we believe the real drag on the economy lies in more diligent implementation of Covid restrictions by local authorities rather than insufficient borrowable funds.”

The Chinese offshore yuan last fell 0.1% to 7.1759 per dollar.

Reporting by Rai V; Edited by Ana Nicolaci da Costa

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Our Standards: The Thomson Reuters Principles of Trust.

Source: news.google.com

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