The dollar index held steady around 106.9 on Wednesday as investors prepared for the release of the latest US PCE price index report, the Federal Reserve's preferred inflation measure.
Market participants are also looking ahead to other key data, including initial jobless claims, a second reading of GDP, and figures on personal income and spending.
Minutes from the FOMC's November meeting revealed that officials were optimistic about easing inflation and the strength of the labor market, which supports the case for further rate cuts. However, they indicated a preference for gradual adjustments.
Markets are currently pricing in a 63% chance that the Fed will reduce rates by another 25 basis points next month.
On Tuesday, the dollar initially rallied after Trump threatened tariffs on China, Mexico, and Canada, but reversed course as traders awaited further details on the proposed measures. The dollar remained steady against most major currencies, but weakened against the kiwi and yen.
Source: Trading Economics
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