The US dollar slipped to fresh lows against a basket of major currencies on Tuesday, as broad weakness gripped the greenback ahead of the Federal Reserve’s meeting minutes.
The dollar index, which tracks the dollar against six other currencies, fell 0.2% to 103.2 – a 2-1/2-month low. The euro rose 0.2% to $1.0963, hitting its highest level since mid-August. The Japanese yen gained over 0.5% to 147.5 per dollar, its strongest in seven weeks.
China guided its yuan higher, with the benchmark rate fixed at its strongest since August 7th. However, dollar weakness was evident across the board. The New Zealand dollar broke through resistance to reach a three-month peak of $0.6072, while the Australian dollar hit a three-month high of $0.6585.
The British pound and Swiss franc also notched milestones against the struggling greenback. Sterling rose to $1.2540, its highest in two months. The Swissy hovered near levels not seen since early September.
Spot gold has also surged, reaching a high of $1,994.53 during the Asian session.
Analysts are attributing the broad-based dollar decline to falling US yields and market expectations that the Fed will pause interest rate hikes at its December meeting. However, Mizuho Bank has warned that markets may be getting ahead of themselves on rate cut expectations.
The dollar has now fallen for seven of the past eight sessions. All eyes are on the Fed minutes due later today for clues on policymakers’ thinking on rates.