US yields decline and improved risk sentiment limit the dollar’s advance, with 7bps of Fed tightening still priced in for next week.
The US dollar’s gains are easing as Treasury yields retreat and risk appetite stabilizes following a tech-driven selloff. High-beta currencies lead modest advances, while the EUR and GBP edge higher but fail to capitalize on positive economic data.
Markets remain cautious ahead of next week’s Federal Open Market Committee meeting, with overnight index swaps pricing in 7bps of potential tightening. Geopolitical tensions and Fed policy risks continue to support the dollar and US yields, despite softer energy prices.
Investors are likely to avoid riskier assets into the weekend, keeping the dollar relatively supported. While a Fed hike remains unlikely amid an ongoing operational review, swaps markets reflect lingering uncertainty.