By Ankur Banerjee and Harry Robertson SINGAPORE/LONDON, Aug 18 The U.S. dollar rose slightly on Tuesday but remained near multi-month lows against its peers as traders reduced their bets on rate hikes, although the threat of an escalation in the Middle East war left sentiment…
agile. The euro eased away from two-month highs of $1.161 touched on Monday and was last little changed at $1.157
Sterling was at $1.352, dipping 0.1% on weak UK labour market data, just shy of the three-month peak it hit in the previous session. Data in the past few weeks have pointed to a softer U.S. economy, including unexpected job losses last month and mild inflation readings, leading investors to scale back expectations of a rate hike by the U.S. Federal Reserve.
INFLATION ANGST By contrast to currency markets, bond traders were more focused on concerns about inflation stemming from the Middle East war as well as on increased fiscal pressures. Long-term borrowing costs for major economies were at their highest levels in decades on Tuesday. Traders expect a 35% chance of a rate increase at the Fed’s September meeting, compared with 52% a week ago, according to the CME FedWatch tool.