Euro zone bond yields dipped in early trade following a surge on Tuesday after the bloc's inflation data came in much higher than expected.
The dollar index which measures the currency against six major peers, including Japan's, rose 0.2% to 102.05, extending a 0.4% rally from Tuesday.The U.S. Federal Reserve begins shrinking asset holdings built up during the pandemic on Wednesday. Traders expect it will raise rates by 50 bps at meetings this month and next and they are unsure and increasingly worried about after that.
"We're in this kind of twilight zone now where it's just very difficult to get a handle on what the Fed are going to do after the July meeting," said Bank of Singapore analyst Moh Siong Sim.
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