Dollar steadies as Fed’s Waller cautions on inflation By Reuters

By Ankur Banerjee

SINGAPORE (Reuters) – The U.S. dollar steadied on Monday after Federal Reserve Governor Christopher Waller said the central bank was not softening its fight against inflation, which made some investors think that the steep sell-off last week was probably overdone.

A slightly cooler-than-anticipated inflation data on Thursday put the greenback in a tailspin, with the slipping 4% for the week, its worst week in more than two and half years.

The dollar index, which gauges the greenback against a basket of six counterparts that includes the yen, euro and sterling, rose 0.234% to 106.960 during Asian trade on Monday, coming off the nearly three month low of 106.27 it touched on Friday.

Global equities, meanwhile, soared as investors poured into risky assets on hopes that peaking inflation means less aggressive rate hikes from the Fed.

But Waller said on Sunday that the inflation print last week was “just one data point” that would have to be followed, and h other similar readings would be needed to show convincingly that inflation was slowing.

Waller did add, however, that the Fed could now start thinking about hiking at a slower pace.

“I think the market got a little bit ahead of itself,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia (OTC:), adding the market can expect more reality checks from Fed officials, which would help the dollar to recoup more ground.

U.S. inflation will likely remain high and keep the Fed on its monetary tightening path, Kong said.

U.S. consumer sentiment fell in November, pulled down by persistent worries about inflation and higher borrowing costs, a survey showed on Friday.

Sim Moh Siong, currency strategist at Bank of Singapore said the Fed’s job was still not done and the central bank is unlikely to want the equity market to rally too much or bond yields to come off too much.

“If the financial markets get too buoyant, they will probably growl louder to make themselves heard in terms of their inflation message.”

The U.S two-year yield, which reflects rate move expectations, edged up to 4.41%, after diving as low as 4.29% on Friday, while the U.S. 10-year yield was up 7 basis points at 3.899%.

Elsewhere, cryptocurrencies remained under pressure from ongoing turmoil after the fall of crypto exchange FTX. FTX’s native token, FTT, was last down 7.6% at $1.31, taking its month-to-date losses to nearly 95%.

fell 2.2% slipping below $16,000.

Sterling was swaying at $1.1747, down 0.74% on the day, having risen 4% in the previous two sessions ahead of the Autumn Statement on Thursday when Britain’s finance minister Jeremy Hunt is expected to set out tax rises and spending cuts.

The Japanese yen weakened 0.60% versus the greenback at 139.63 per dollar, while the euro was down 0.47% to $1.0303.

The risk-sensitive Australian and New Zealand…