Dollar weakens against major currencies While investors are keeping an eye on the results of the Federal Reserve’s (Fed) meeting tonight.
As of 9:04 p.m. PST, the dollar was 0.72% lower to 134.49 yen, while the euro was down 0.6% to 140.24 yen and rebounded 0.13% to $1.043. The index measures the dollar’s movements against the six major currencies in the money basket, minus 0.31% to 105.19.
The CME Group’s FedWatch Tool indicates that investors are weighing almost 100% that the Fed will raise interest rates by 0.75% at this round of meetings. This will be the most intense interest rate hike since 1994 to stave off a spike in inflation.
Investors also expect the Fed to continue raising interest rates to near 4% in 2023 from the current 0.75-1.00%.
The Fed has kicked off a rate hike cycle with a 0.25% hike in March and 0.50% in May, while Fed Chairman Jerome Powell signaled the Fed would raise interest rates. 0.50% in both June and July
However, inflation in the US continues to rise. The US Department of Labor said on Friday that The Consumer Price Index (CPI), which measures inflation from consumer spending, jumped 8.6 percent in May year on year. That was the highest level in more than 40 years, or since 1981, and beat analyst expectations of 8.3 percent.
Jan Hatzius, chief analyst at Goldman Sachs, said in the report. The Fed will raise interest rates by 0.75% at its meeting. and will continue to raise interest rates by 0.75% at the July meeting
Hatzius also expects the Fed to raise interest rates 0.50% in September, before only 0.25% in November and December.
The report said the Fed will continue to raise interest rates to 3.25-3.50 percent from the current 0.75-1.00%.