# Dollar set for weekly loss amid expectations Fed will slow hikes
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-11-25
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: USD Falls Near Three-Month Low as Fed Hints at December
Meta Description: Stay updated on the latest forex news with the U.S. Dollar on the decline. Learn more about the impact of Fed policy on currency markets.
URL: https://financedigest.com/dollar-set-for-weekly-loss-amid-expectations-fed-will-slow-hikeshtml

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By Rae Wee and Joice Alves

SINGAPORE/LONDON (Reuters) – The U.S. dollar hovered near a three-month low on Friday and was [headed for a weekly](https://www.financedigest.com/oil-prices-stable-heading-for-weekly-gain.html "Oil prices stable, heading for weekly gain") loss, as the prospect of the Federal Reserve slowing monetary policy tightening as soon as December preoccupied investors.

The euro edged up after the GfK institute survey showed [German consumer sentiment is expected](https://www.financedigest.com/german-economy-expected-to-skirt-recession-economy-ministry-report.html "German economy expected to skirt recession – economy ministry report") to stabilise next month with the help of energy measures.

The [dollar was struggling](https://www.financedigest.com/u-s-dollar-struggles-pound-hits-one-year-high.html "U.S. dollar struggles, pound hits one-year high") to make headway after thin trading on Thursday due to the U.S. Thanksgiving holiday.

Risk-sensitive sterling was near a three-month high against the U.S. currency.

We’ve still got the [third successive day of positive risk sentiment](https://www.financedigest.com/sentiment-among-german-exporters-falls-for-third-month-in-a-row-ifo.html "Sentiment among German exporters falls for third month in a row -Ifo") … I [think that is keeping](https://www.financedigest.com/the-pull-of-the-past-1-in-5-keep-items-they-think-will-be-valuable-in-the-future.html "The pull of the past! 1 in 5 keep items they think will be valuable in the future") the U.S. dollar subdued pretty much across the board,” said Ray Attrill, [head of FX strategy at National Australia Bank](https://www.financedigest.com/hsbc-appoints-new-markets-head-amid-wider-investment-bank-reshuffle.html "HSBC appoints new markets head amid wider investment bank reshuffle").

Minutes from the Fed’s November meeting released earlier this week showed that a “substantial majority” of policymakers agreed it would soon be appropriate to [slow the pace](https://www.financedigest.com/uk-recruiters-slow-pace-of-pay-growth-in-march-rec-survey-shows.html "UK recruiters slow pace of pay growth in March, REC survey shows") of interest rate rises.

Those remarks sent the [dollar tumbling as the Fed’s aggressive rate increases and market expectations](https://www.financedigest.com/dollar-drops-as-inflation-cools-more-than-expected.html "Dollar drops as inflation cools more than expected") of how high the central bank could take them has been a big driver of the currency’s 10% surge this year.

Against a [basket of currencies](https://www.financedigest.com/the-yuan-makes-its-official-entry-into-rawbanks-currency-basket.html "The yuan makes its official entry into RAWBANK’s currency basket"), the U.S. dollar index stood at 105.8, down 0.05% on the day.

The Fed aside, [accounts of the European Central Bank’s](https://www.financedigest.com/new-legislation-makes-switching-bank-accounts-simples.html "New legislation makes switching bank accounts “simples”") October meeting released overnight showed that policymakers fear that inflation may be getting entrenched in the euro zone. While the [ECB firmly committed to further rate](https://www.financedigest.com/fed-rates-up-boe-up-ecb-up-stocks-up.html "Fed rates up, BoE up, ECB up, stocks up") rises, markets are now expecting a more modest, 50 basis point move at the December meeting.

Against the dollar, the [euro gained](https://www.financedigest.com/dollar-trims-gains-vs-euro-after-u-s-inflation-data.html "Dollar trims gains vs euro after U.S. inflation data") 0.1% to $1.0420, edging toward an over four-month high of $1.0481 hit last week. The Japanese [yen was unchanged on the day at 138.63 to the dollar](https://www.financedigest.com/yen-sinks-as-rates-outlook-diverges-nz-dollar-tumbles.html "Yen sinks as rates outlook diverges; NZ dollar tumbles").

Core consumer prices in Japan’s capital rose at their fastest annual pace in 40 years in November, exceeding the [central bank’s](https://www.financedigest.com/central-banks-keep-hiking-rates-amid-banking-turmoil.html "Central banks keep hiking rates amid banking turmoil") 2% target for a sixth straight month, government data showed.

The New Zealand dollar fell 0.26% to $0.6248 but remained [close to its three-month peak hit](https://www.financedigest.com/nestle-closes-french-buitoni-factory-hit-by-e-coli-outbreak.html "Nestle closes French Buitoni factory hit by E.coli outbreak") in the previous session. The kiwi was eyeing a [weekly gain](https://www.financedigest.com/european-shares-set-for-weekly-gain-on-u-s-inflation-outlook.html "European shares set for weekly gain on U.S. inflation outlook") of more than 1.5%, aided by the Reserve Bank of New Zealand’s 75 bp rate increase this week and its hawkish rate outlook.

In China, [markets were closely watching for an expected cut in banks’](https://www.financedigest.com/deutsche-bank-equity-bear-market-rally-will-stretch-into-2023-dollar-weaker.html "Deutsche Bank: Equity bear market rally will stretch into 2023, dollar weaker") reserve requirement ratio (RRR).

[China will use timely cuts](https://www.financedigest.com/lighting-maker-signify-cuts-2022-outlook-again-on-china-business-lighting.html "Lighting maker Signify cuts 2022 outlook again on China, business lighting") in banks’ RRR, alongside other monetary policy tools, to keep liquidity reasonably ample, state media quoted a cabinet meeting as saying.

The offshore Chinese yuan was last at 7.1662 to the [dollar and was headed for a second weekly loss](https://www.financedigest.com/dollar-retreats-headed-for-biggest-weekly-loss-since-mid-january-bitcoin-down.html "Dollar retreats, headed for biggest weekly loss since mid-January; bitcoin down"), as COVID worries continue to weigh.

[(Reporting by Rae Wee in Singapore and Joice Alves in London; Editing by Emelia Sithole-Matarise)](https://www.financedigest.com/london-reclaims-place-as-preeminent-global-financial-centre-for-the-first-time-since-2013-according-to-global-regulatory-outlook-report-from-duff-phelps.html "London reclaims place as preeminent global financial centre for the first time since 2013, according to Global Regulatory Outlook report from Duff & Phelps")


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