The U.S. dollar held steady against major currencies on Tuesday as investors analyzed comments from Federal Reserve officials on the future path of monetary policy. In contrast, the Swedish krona strengthened after the Riksbank delivered a hawkish 25-basis-point rate cut.
The dollar inched up 0.03% to 0.792 against the Swiss franc. The euro slipped slightly to $1.1796, while the British pound remained unchanged at $1.3510. Against the Japanese yen, the dollar gained 0.05% to 147.75.
Federal Reserve Vice Chair for Supervision Michelle Bowman warned that the Fed may be moving too slowly to support the labor market. She said a faster pace of rate cuts could be necessary if demand weakens and layoffs increase. Fed Chair Jerome Powell was also scheduled to speak later on Tuesday, following remarks from St. Louis Fed President Alberto Musalem and Fed Governor Stephen Miran on Monday.
Despite a recent interest rate cut, the dollar index — which tracks the greenback against a basket of currencies including the yen and euro — was little changed at 97.34. Vassili Serebriakov, FX strategist at UBS in New York, noted that gold’s strength has been the standout factor in the current environment.
Money markets are pricing in nearly a 90% chance of another Fed rate cut in October, according to CME’s FedWatch tool. That is down slightly from 92% the previous day. Market jitters have also increased due to Congressional negotiations over government funding ahead of a potential September 30 shutdown.
Meanwhile, the Swedish krona rose 0.09% to 9.337 versus the dollar after the Riksbank’s surprise move. Analysts at Goldman Sachs suggested that the krona’s strength may also have been influenced by stronger-than-expected German PMI data released at the same time.
Elsewhere in Europe, business survey data showed eurozone activity growing at its fastest pace in 16 months during September. However, French economic activity contracted at the steepest rate since April, pointing to uneven performance across the bloc.
In emerging markets, the dollar surged nearly 4.5% against Argentina’s peso after U.S. Treasury Secretary Scott Bessent said that “all options” remain on the table to stabilize Argentina’s economy, including swap lines and direct dollar purchases.
The Indian rupee hit a record low of 88.7975 per dollar. Pressure came from higher U.S. visa fees, weak foreign equity inflows, and an increase in hedging activity.
