NEW YORK: The US dollar held steady against major peers on Tuesday as investors weighed commentary from Federal Reserve officials on its monetary policy outlook, while the Swedish krona gained after the Riksbank delivered a hawkish 25-basis-point rate cut.
The dollar was up 0.03 percent to 0.792 against the Swiss franc
The euro was a touch lower at USD1.1796 while sterling was flat at USD1.3510.
The Federal Reserve may be late in supporting the labor market and could need to speed the pace of rate cuts if demand conditions weaken and businesses begin to lay off workers, Fed Vice Chair for Supervision Michelle Bowman said on Tuesday.
Fed Chair Jerome Powell is scheduled to also speak on Tuesday. Other Fed officials including St. Louis Federal Reserve President Alberto Musalem and Federal Reserve Governor Stephen Miran had delivered remarks on Monday.
The dollar has been stable following the Fed interest rate cut but the most interesting thing is the strength of gold in the current environment, said Vassili Serebriakov, FX strategist at UBS in New York.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, was little changed at 97.34. Money markets are currently pricing in a near-90 percent chance of a rate cut in October, down slightly from 92 percent a day earlier, per CME’s FedWatch tool.
Congressional funding talks this week to avert a government shutdown on September 30 have added to market jitters.
The dollar was up 0.05 percent to 147.75 against the Japanese yen .
The Swedish krona gained 0.09 percent to 9.337 versus the dollar after the Riksbank delivered a hawkish 25-basis-point rate cut.
“The degree of SEK outperformance post meeting strikes us as somewhat at odds with the surprise decision and meeting guidance,” Goldman Sachs analysts led by Stuart Jenkins said in an investor note. “Some of the currency strength may be attributable to the firmer German PMI data released at the same time as the decision.”
Meanwhile, markets showed a largely muted reaction to a mixed bag of business survey readings in Europe. While the data showed that euro zone business activity grew at its fastest pace in 16 months in September, it also pointed to French economic activity contracting the same month at the sharpest rate since April.
Among other currencies, the dollar sank nearly 4.5 percent against Argentina’s peso after US Treasury Secretary Scott Bessent said on Monday that “all options” were on the table for stabilising Argentina, including swap lines and direct currency purchases.
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