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Investors will now turn their attention to next week’s inflation print and a string of speaking engagements from Fed officials “- including Chairman Jerome Powell “- for clues on the path of monetary policy. Image Credit: REUTERS

Washington: The dollar plunged by the most in more than three weeks as US data prompted some traders to bet on smaller Federal Reserve interest-rate hikes ahead.

The Bloomberg Dollar Spot Index weakened 1.1 per cent on Friday, the biggest drop since mid-December, after data showed slower-than-expected wage growth and weakness in a key US services gauge.

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While the economic indicators prompted some traders to pare back their expectations for the pace of Fed rate increases ahead, others on Wall Street were less convinced “- especially after central bank officials stressed the need to combat inflation.

Federal Reserve Bank of Atlanta President Raphael Bostic said he would be “comfortable” with either a 25- or 50-basis-point rate increase at the moment. Kansas City Federal Reserve Bank President Esther George, meantime, said officials have a tough road ahead in determining policy as they try to balance inflation and employment.