The dollar edged lower on Wednesday as traders assessed the odds of a rate hike by the Federal Reserve next week, while the Aussie scaled a fresh three-week high in the wake of a rate increase and a decidedly hawkish stance by its central bank .
The Australian dollar peaked at $0.6690 in early Asia trade, its highest since mid-May, buoyed by lingering effects of the Reserve Bank of Australia's quarter-point interest rateThe decision and the RBA's hawkish policy statement had sent the Aussie rising 0.8% in the previous session, with governor Philip Lowe warning of more tightening on the cards because inflation was still too high.
"The cash rate is now 4.1%, which we think is in a deeply restrictive territory, so that obviously means that the risk of a hard landing in the Australian economy has increased," said Carol Kong, a currency strategist at Commonwealth Bank of Australia.on Wednesday, Lowe reiterated that some further tightening may still be required to bring inflation to heel, though that would depend on how the economy and inflation evolve.
In the broader currency market, the U.S. dollar dipped in early Asia trade, as traders pared back their expectations of a rate hike at next week's FOMC meeting.Money markets are pricing in a roughly 19% chance that the U.S. central bank will raise rates by 25 basis points next week, compared to an over 60% chance a week ago, according to the CME FedWatch tool.that the U.S.
"We don't think the FOMC will hike next week ... but risks again are skewed to the upside," said Kong.Euro zone consumers lowered their inflation expectations, a European Central BankAgainst the Japanese yen , the greenback slipped 0.27% to 139.26. Elsewhere, the Turkish lira slid nearly 2% to a fresh record low of 21.99 per U.S. dollar, while the Canadian dollar rose to a fresh one-month high of C$1.3388 to the greenback ahead of an interest rateIn the cryptoverse, bitcoin , the world's biggest cryptocurrency, was last marginally higher at $27,273, after jumping nearly 6% on Tuesday.
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