Against a basket of currencies, the dollar index DXY rose 0.1% to 105.38, after climbing 0.2% on Monday, but remained not far from a nearly two-month low of 104.84 touched on Monday. The index fell 1.3% last week, its steepest decline since mid-July. “If Powell sounds a bit more hawkish to push back against the easing of financial conditions later this week … I think the dollar can rebound,” said CBA’s Kong. “But I think it’s still too early to say the latest easing in the dollar will be sustained. Just given that the FOMC is still unclear whether or not they wanted to hike rates further.”
The dollar advanced on Tuesday as last week’s rally in riskier currencies took a breather, while the Aussie slid after the Reserve Bank of Australia raised rates but tweaked its outlook, spurring investor expectations that rate hikes are nearing an end.The RBA raised interest rates by 25 basis points on Tuesday, as expected, ending four months of steady policy, but altered its language regarding the outlook.