Dollar Pauses After Rally, Yen and Other Major Currencies Stabilize

Dollar Stabilizes, Offering Relief to Global Currencies

The U.S. dollar paused its rally on Wednesday, providing relief to major currencies like the yen, following last week's sharp rise to a seven-week high. Investors are reassessing the U.S. interest rate path amid a relatively light economic data calendar this week.

Kiwi Hits Low After RBNZ Holds Rates

The New Zealand dollar slumped to $0.6096, its lowest since August 19, after the Reserve Bank of New Zealand (RBNZ) opted to keep interest rates unchanged at 5.50%. The Kiwi was last down 0.55%, trading at $0.61035. The RBNZ had previously started an easing cycle in August to reduce rates from 15-year highs.

U.S. Dollar Outlook: Inflation and Earnings Key

Market attention now shifts to Thursday's Consumer Price Index (CPI) report, which is expected to drive the next phase of the dollar's movement. Following stronger-than-expected jobs data last week, markets have scaled back expectations for significant interest rate cuts by the Federal Reserve in November. However, a quarter-point reduction remains a possibility.

Global Currencies Respond

The dollar index remained stable at 102.490, near its recent high of 102.69. The euro held firm at $1.0977, while the British pound traded at $1.3101. Meanwhile, the Australian dollar struggled, down 0.08% at $0.67415.

China's Economic Outlook

In China, despite economic concerns, Beijing expressed confidence in meeting its annual growth targets. However, investors remain cautious as no additional fiscal support measures were announced, leaving the offshore yuan stable at 7.0695 per dollar.