The dollar retreats from its highs; euro helped by German data By Investing.com

Investing.com – The U.S. dollar fell on Tuesday but remained near seven-week highs as traders weighed the outlook for the Fed’s monetary policy following last week’s strong jobs report.

At 04:20 ET (08:20 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, traded 0.2 percent lower at 102,139, after climbing to a high of almost two months.

The dollar is taking a break from gains

Friday’s strong report prompted traders to reassess the Federal Reserve’s rate cut path, with the chance of another 50 basis point cut in November largely passed over in favor of a more traditional 25 basis point cut .

The benchmark, reflecting less aggressive expectations, remained elevated above 4 percent on Tuesday, while the two-year yield neared its highest level in more than a month.

That helped boost the dollar, as did escalating tensions in the Middle East, which hurt risk sentiment.

There are a number of addresses from Fed officials to digest this week, as well as the September inflation report and the minutes of last month’s Fed meeting.

“We have seen fairly limited currency influence from US 10-year yields hitting the 4% mark, which appears as the tail end of the wage-led move that has already triggered some sizeable repositioning in dollar crosses,” ING analysts said. , in a note.

“There is a possibility that the currency market will take a break from being rate-driven now that the Fed’s new rate path of 25bp per meeting has become the market’s baseline. We suspect that this week’s inflation data will not cause large changes in direction for the dollar, which may be more responsive to the turbulence in the Middle East and subsequent movements in oil prices.”

Euro helped by German industrial production

In Europe, it rose 0.2% higher to 1.0995 as the euro was helped by the release of stronger-than-expected data as August release rose 2.9% higher than expected, vs from the previous month.

However, the less volatile three-month-on-three-month comparison showed output was 1.3% lower in the June-August period than in the past three months.

It meets next week and is expected to ease policy once more, having already cut rates twice this year as inflationary pressures eased.

it rose 0.2% to 1.3104, pulling away from a three-week low of 1.3059 it hit on Monday.

Data released earlier on Tuesday showed that sales in Britain’s retail sector rose at the fastest pace in six months during September.

Total sales rose 2% year-on-year, according to the British Retail Consortium, helped by a 3.1% increase in food retailers, while non-food transactions fell 0.3%.

Yuan retires after the holiday

fell 0.4 percent to 147.55 as it clawed back some of the steep gains seen in the past week.

Data showing steady growth in wages and household spending also helped the Japanese currency.

rose 0.5% to 7.0506 as trading resumed after a week.

Sentiment toward China has been boosted by a raft of stimulus measures from Beijing, including lower interest rates, but they are putting more pressure on the yuan, especially as US interest rates are expected to remain higher.