Forex - Dollar edged lower as investors downward August rate outlook - Forex Forum

The Dollar edged lower on Wednesday as investors adjusted their interest rate outlooks for the United States and the euro zone after conflicting economic data and monetary authorities toned down threats of tighter policy.

Traders scrambled to revise downward their expectations of an August Federal Reserve interest rate rise after data this week showed US housing starts plunged to a 17-year low in May. In addition, Wholesale prices shot up, driven by energy costs, but analysts reckon the Fed will not rush to tighten policy in the absence of signs of stability in the housing sector, which threatens to drag the broader economy into a recession.

The US central bank is widely expected to keep its benchmark fed funds rate target at 2% next week. While expectations of a series of rates hikes from the ECB have also been scaled back in recent days, a move to 4.25% in July is still widely expected.


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