The greenback edged up against sterling and hovered more than 1% above its two-month trough to the euro after Fed Vice Chair Lael Brainard on Monday echoed weekend comments by Fed Governor Christopher Waller that interest rates need to keep rising to battle inflation, although potentially at a slower pace.
The index held onto gains made on Monday when it rebounded from a three-month low of 106.27 hit on Friday. Money markets are currently pricing in an 89% probability that the Federal Open Market Committee will slow the pace of hikes to a half point at its next meeting on December 14, against 11% odds for another 75 basis point increase.
The risk-sensitive Australian dollar eased 0.13% to $0.66935, but stayed relatively close to Monday’s nearly two-month peak of $0.6720, buoyed by key trading partner China’s moves to ease COVID-19 restrictions and support the property market.