Dollar recoups losses as markets await Fed minutes, speakers

The US dollar rebounded on Wednesday as traders anticipated Federal Reserve minutes and speeches from policymakers. The euro lost some of its gains from the previous day after French bonds surged due to a presidential candidate proposing larger spending cuts. The yen weakened, despite a dovish Bank of Japan board member expressing support for rate hikes.

Following Wednesday's sessions, the Federal Reserve will release minutes from its September policy meeting, where it previously increased interest rates to combat inflation. Fed officials have been perceived as less aggressive in raising rates following milder-than-expected personal consumption expenditure and jobs data. Gavin Friend, a National Australia Bank strategist, noted a reduced urgency for rate hikes due to softer inflation indicators.

The dollar index climbed 0.16% to 102.07, recovering from a 0.27% drop on Tuesday. The euro slipped 0.25% to $1.123, while the yen declined 0.19% to 158.39 per dollar, and the British pound fell 0.21% to $1.3244. The greenback also benefited from safe-haven demand following a Houthi attack on a Yemeni airport. Bond yields worldwide have risen due to expectations of rate hikes and concerns about government finances.

French debt faced pressure as politicians aim to reduce deficits ahead of a 2027 election. The BOJ's new policymaker Ayano Sato hinted at potential interest rate increases, while some Fed officials suggest further rate hikes are still needed to curb inflation.