The US dollar strengthened on Wednesday, buoyed by its safe-haven status amid escalating tensions between Russia and the US. By 13:26 MSK, the dollar index rose by 0.33% to 106.56, recovering from a weekly low earlier in the session.
Last week, the index reached its highest level in over a year following Donald Trump's presidential victory, driven by expectations of increased government spending, higher tariffs, and stricter immigration policies—factors that could spur inflation and potentially delay the Federal Reserve's easing policy.
With no significant economic data released, investors are closely watching comments from Federal Reserve officials Lisa Cook, Michelle Bowman, and Boston Fed President Susan Collins for hints on future monetary policy decisions. Traders are adjusting their rate cut expectations for the Fed's December meeting, now at 58.9%, down from 82.5% a week ago.
Meanwhile, the GBP received a boost from UK inflation data, which rose to 2.3% in October, the highest in six months. This led to a rapid appreciation of the pound against the dollar and the yen. Market participants are now pricing in a 85% chance of the Bank of England holding rates at its December meeting, with a potential cut in February.