NEW YORK: The US dollar rose on Tuesday ahead of an expected rate cut from the Federal Reserve on Wednesday, while the Australian dollar was firmer after its central bank ruled out more easing.
Markets are anticipating a rate cut from the Fed, and preparing for several more central bank decisions before the weekend. The greenback extended gains after data showed US job openings increased modestly in October, while hiring remained subdued.
Job openings, a measure of labor demand, were up 12,000 to 7.670 million by the last day of October, according to the Job Openings and Labor Turnover Survey, or JOLTS report, on Tuesday. Economists polled by Reuters had forecast 7.150 million unfilled jobs. The dollar gained after the report, extending gains versus the yen to 156.735 yen and the euro, which slipped 0.1 percent to USD1.1619.
With the data out of the way, the market has turned its focus once again to the Fed. Investors are dialing back expectations of rate cuts in 2026 as scepticism mounts that Kevin Hassett, the frontrunner to succeed Jerome Powell, whose eight-year term as Fed chair ends in May, will prove not as dovish as hoped by US President Donald Trump. “After being wrong-footed by communications in the last five decisions, investors are all-in on bets for a ‘hawkish cut’ —a drop in the policy rate accompanied by cautious guidance in the statement, dot plot, and press conference,” said Karl Schamotta, chief market strategist, Corpay in Toronto. “This is seen keeping front-end US yields well supported and preventing an erosion in the dollar into year-end,” he added. The US dollar index, which measures the greenback’s strength against a basket of six currencies, rose 0.2 percent to 99.22. US OUTLOOK IN 2026 With markets seeing that policy easing from the US central bank this week is a near-certainty, attention is also turning to the outlook for the year ahead. “When the statement is published, everyone will be looking at the dot plot,” said Commerzbank FX analyst Michael Pfister.
“We are seeing decision-makers with diverging views now,” he said, adding that if the dot plots are lower than the last time, this will probably not be helpful for the dollar.
The “dots” from the September meeting, when the Fed resumed its easing cycle with a 25 basis-point cut, showed a policy rate of 3.6 percent by the end of 2025, 3.4 percent at the end of 2026, and 3.1 percent by the conclusion of 2027. Elsewhere, the euro slipped following Monday’s selloff in bund markets, after ECB board member Isabel Schnabel told Bloomberg News that the bank’s next move may be an interest rate hike rather than a cut as some expect, but added that it would not happen in the near future.
The Australian dollar strengthened after the Reserve Bank of Australia kept rates on hold. The currency advanced 0.4 percent to USD0.6647 after the central bank held rates for a third consecutive month at 3.6 percent as widely expected, and warned that a pickup in inflation could be persistent.
The British pound was slightly down at USD1.3312, while the New Zealand dollar was up 0.3 percent at USD0.5794. In cryptocurrencies, bitcoin slipped 0.1 percent to USD91,601.48 while ether rose 0.5 percent to USD3,168.21.
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