Dollar Index Edged Down Last Week

(RTTNews) - The U.S. Dollar retreated and the Dollar Index edged down during the week ended October 23 that witnessed renewed AI jitters and geopolitical tensions. Expectations of a monetary policy pause by the Federal Reserve kept the Dollar Index subdued. The debt-market-turmoil in Fance also weighed on currency market sentiment.

During the past week, the U.S. dollar inter alia declined against the British pound, the Australian dollar, the Japanese yen as well as the Canadian dollar. It however rallied against the euro, the Swedish krona, as well as the Swiss franc. The 6-currency Dollar Index edged down over the course of the week. Here is a quick recap of the dollar's trajectory during the week ended October 23.

During the week, the Dollar Index (DXY), a measure of the Dollar's strength against a basket of 6 currencies dropped from the high of 102.08 recorded on Monday to a low of 101.45 recorded on Thursday. The Dollar Index which had closed at 101.84 on October 16, finished trading at 101.81 a week later. The index edged down 0.03 percent during the week ended October 23.

Amidst the political unrest in Europe, the EUR/USD pair plunged 0.33 percent in a week. By the end of the week on October 23, the EUR/USD pair dropped to 1.1203, from 1.1240 a week earlier. The pair ranged between a weekly low of 1.1182 recorded on Monday and a weekly high of 1.1261, recorded on Tuesday. The euro has a weight of 57.6 percent in the six-currency Index.

The week ended October 23 also witnessed the pound gaining more than a quarter percent against the dollar. The sterling, which had closed at $1.3329 on October 16 increased to $1.3373 by October 23. The GBP/USD pair traded between a low of 1.3298 touched on Monday and a high of 1.3421, recorded on Thursday.

Amidst hawkish comments from officials of the Reserve Bank of Australia, the Aussie jumped 1.28 percent against the U.S. Dollar during the week ended October 23. The AUD/USD rallied from 0.6947 on October 16 to 0.7036 on October 23. The pair traded between the week's low of 0.6954 recorded on Monday and the week's high of 0.7039 recorded on Friday.

The Japanese yen also strengthened against the U.S. dollar during the week ended October 23. The USD/JPY pair which had closed at 158.01 on October 16, dropped to 156.87 in a week's time. During the week, the pair ranged between 158.61 touched on Tuesday and 156.07 recorded on Friday. The Japanese currency strengthened last week as a global selloff in technology and artificial intelligence stocks boosted demand for safe-haven assets.

Sentiment in the currency market remains cautious at the onset of the new week, a pivotal central bank week. Interest rate decisions from the Federal Reserve, European Central Bank as well as Bank of Japan are due during the week. Market spotlight would also be on the central bank commentary regarding the interest rate outlook.

Despite the decline in crude oil prices as well as the easing in bond yields, the Dollar Index has gained mildly on Monday. The index traded between 101.63 and 101.94. Weighed by anxiety ahead of the Federal Reserve's interest rate review on Wednesday, DXY is currently trading 0.06 percent higher at 101.87, versus 101.81 at close on Friday. Updates to key economic data including Durable Goods Orders, PCE-based inflation as well as GDP are due from the U.S during the week.

Meanwhile, data from the CME FedWatch tool that tracks the expectations of interest rate traders, shows the likelihood of a quarter-percentage Fed rate hike on Wednesday decreasing to 9.4 percent from 10 percent on Friday.

Ahead of Thursday's interest rate decision by the European Central Bank and expectations of a pause, the EUR/USD pair has weakened 0.06 percent to 1.1196 from 1.1203 at close on Friday. Moody's decision to maintain the country's sovereign credit rating helped stem the euro's decline.

Amidst the dollar's strengthening, the GBP/USD pair has declined, losing 0.18 percent to 1.3353, from 1.3373 at the end of the previous week. The AUD/USD pair has also decreased 0.09 percent to 0.7028 from 0.7036 at close on Friday.

The USD/JPY pair has jumped 0.29 percent, rising to 157.29 from 156.87 at close on Friday even as markets wait for Bank of Japan's interest rate decision due on Friday. Markets expect BoJ to stay pat on rates which has weighed on the yen's strength.