The US dollar's recovery continued for a third day on Wednesday after several Federal Reserve policymakers left the door open for further rate hikes, while traders were watching a speech from Chairman Jerome Powell for further indications from the central bank.
The US dollar, which hit a seven-week low earlier in the week following the Fed's decision to keep its policy rate steady and data showing a slowing US labor market. Markets are still divided on whether the Fed has reached the peak in rate hikes and how soon the Fed can start easing policy.
Stock market futures indicated a roughly 16% chance of another hike by January, but priced in a 21% chance that a rate cut could happen as early as March, based on the CME FedWatch tool.
The US dollar index last week posted its biggest weekly drop in about four months, now strengthening 0.11% to 105,482 and on track for a weekly gain.
Federal Reserve Chairman Jerome Powell has so far said central banks must be willing to think outside the mathematical simulations typically used to forecast the economy. "Intellectual facts need to be combined with flexibility and agility in taking action," Powell said in his opening remarks.
