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U.S. Dollar Gains Amid Fed Hawkish Comments

The U.S. dollar gained in late trading on Tuesday, as some Federal Reserve officials remained hawkish.

The dollar index, which measures the greenback against six major peers, increased 0.31 percent to 105.5460 in late trading.

Third-quarter U.S. economic growth, at an annualized 4.9 percent rate, was a “blowout performance” that warrants watching as the Fed considers its next policy moves, Fed Governor Christopher Waller said on Tuesday.

Another Fed governor, Michelle Bowman, said she took the recent GDP number as evidence that the economy not only “remained strong,” but may have gained speed and require a higher Fed policy rate. “I continue to expect that we will need to increase the federal funds rate further,” she said.

“Over the next couple of months, we might equal the fastest drop in inflation in the last century,” Chicago Fed President Austan Goolsbee said.

The U.S. 10-year Treasury bond yield dropped five basis points on Tuesday to 4.598 percent after opening at around 4.64 percent.

The CME FedWatch Tool showed odds of additional tightening plunging, as participants saw a 20 percent chance for a 25-bp hike in January 2024. On the other side, rate cuts have begun to be priced in, with odds at 51.05 percent for a 25-bp rate cut in May 2024.

The eurozone’s economy is likely to contract slightly or at best stagnate in the fourth quarter, European Central Bank’s vice president Luis de Guindos said on Tuesday.

In late New York trading, the euro fell to 1.0694 U.S. dollars from 1.0723 U.S. dollars in the previous session, and the British pound sank to 1.2295 U.S. dollars from 1.2351 U.S. dollars.

The U.S. dollar bought 150.4370 Japanese yen, higher than 149.9690 Japanese yen of the previous session. The U.S. dollar was up to 0.9003 Swiss francs from 0.8987 Swiss francs, and it rose to 1.3758 Canadian dollars from 1.3691 Canadian dollars. The U.S. dollar increased to 10.9253 Swedish krona from 10.9080 Swedish krona.