By Peter Nurse
Investing.com – The U.S. dollar edged lower in early European trade Thursday, continuing the previous session’s selloff after the minutes from the latest Federal Reserve meeting signaled a slowdown in future rate hikes.
At 03:05 ET (08:05 GMT), the , which tracks the greenback against a basket of six other currencies, fell 0.1% to 105.933, after sliding 1% overnight.
The dollar saw selling after the from the latest Federal Reserve meeting revealed that a “substantial majority” of policymakers expected a slowing in the pace of rate hikes to soon be appropriate.
The raised its key rate by three-quarters of a percentage point earlier this month, for the fourth straight time in an effort to tame soaring , but the minutes largely cemented expectations for a 50-basis-point hike in early December.
rose 0.1% to 1.0407, benefiting from the dollar selloff as traders wait for the release of the of the last European Central Bank meeting later in the session.
soared above 10% in October, but the November pointed to the region entering recession, creating a dilemma for the ECB policymakers.
The will certainly raise its interest rates considerably, though how far it ultimately goes will depend on how the economic situation develops, the head of Germany’s Ifo economic institute said on Tuesday.
“The ECB still has quite a long way ahead of it,” said Clemens Fuest. “That’s simply because it just started late.”
Also of interest will be the , with traders looking to see the degree of business confidence in the most important economy in the Eurozone.
rose 0.2% to 1.2078, adding to the previous session’s 1.5% gain after preliminary data beat expectations, even though it still pointed to an economic contraction.
Sterling has recovered strongly since falling to a record low of 1.0327 in September when the short-lived Truss government unveiled plans for large unfunded tax cuts.
Elsewhere, fell 0.6% to 138.79, with the yen trading close to a three-month high benefiting from the sharp fall in U.S. Treasury yields after the release of the Fed minutes.
The risk-sensitive rose 0.3% to 0.6748, while rose 0.1% to 0.6245, extended gains after the raised interest rates by 75 basis points on Wednesday, its biggest ever rate hike.
fell 0.3% to 7.1485 after the Chinese government announced a rescue package for its troubled property sector while COVID-19 cases continue to rise.
fell 0.2% to 10.4379 ahead of the latest policy-setting meeting by Sweden’s central bank, with the expected to increase interest rates to try and curtail higher than expected .
“For a while it seemed as if the fastest price rises were behind us. Unfortunately, these hopes were dashed given the inflation outcome for October. Prices rose rapidly and across the board,” said analysts at Nordea, in a note.
“The numbers are likely to worry the Riksbank and reinforce the view that the policy rate will be raised by 75bp to 2.50%.”