The dollar index steadied around 112 on Wednesday, remaining supported by expectations that the Federal Reserve will push ahead with its aggressive tightening plans to bring down inflation.
In the latest Fed commentary, Minneapolis Fed President Neel Kashkari said the central bank may need to lift its policy rate above 4.75% if “underlying” inflation continues to accelerate.
The dollar as federal reserve also continues to prevail as the safe-haven currency of choice amid a worsening global growth outlook. Meanwhile, the greenback has come under pressure earlier this week as solid earnings reports and a dramatic U-turn in UK’s fiscal policy boosted risk appetite.
The dollar held steady against the euro and the sterling, while hovering 32-year highs against the yen despite intervention risks. However, the greenback weakened against the kiwi and the aussie as their respective central banks are expected to keep pace with the Fed’s tightening cycle
While Gold prices held around $1,650 an ounce in subdued trade, trading sideways and remaining under pressure from expectations that the US Federal Reserve will continue raising interest rates aggressively to stamp out inflation. In the latest Fed commentary, Minneapolis Fed President Neel Kashkari said the central bank may need to lift its policy rate above 4.75% if “underlying” inflation continues to accelerate.
Gold also continued to underperform as a safe-haven asset despite persistent inflationary pressures and mounting risks of a global recession, as rising US interest rates drove investors to seek shelter in the dollar. In Russia, the central bank said it sees no need to increase gold holdings in its reserves amid pleas from gold miners for more state purchases as they grapple with Western sanctions.