Sterling was subjected to lacklustre conditions.
In comments on Monday, ECB chief economist Lane stated there would be a further interest rate hike at the December meeting, but that the platform for a 75 basis-point rate hike is no longer there.
He added that the more you’ve already done on a cumulative basis changes the pros and cons of any given increment. The overall rhetoric was notably dovish.
Cleveland Fed President Mester stated that the bank is not anywhere near stopping rate hikes and policy is barely in restrictive territory, although it does make sense to slow the pace of hikes a bit.
She added that there has been some positive news on inflation, but a sustained run of positive news is needed.
San Francisco head Daly stated that she was not ready to say what the central bank should do at the December meeting.
There were further concerns surrounding the coronavirus situation in China after a Beijing official stated that the city faces the most complex and severe covid control situation.
Risk conditions were generally weaker during Monday, especially given Chinese coronavirus concerns, but equity moves were relatively limited as markets waited for further US inflation data.
Overall risk conditions remained important for the dollar trends with the US currency gaining net support on Monday.
The US currency lost some ground on Tuesday with a lack of conviction over near-term trends and an on-going debate whether the US currency has peaked.
There was high volatility in oil prices during Monday with WTI sliding to 10-month lows on reports that Saudi Araba would cut production.
WTI posted heavy losses to near $75.0 p/b before a strong recovery as Saudi Arabia denied the reports.
Dollar retreats from intra-day highs. Dovish ECB rhetoric undermined the Euro during Monday. The Euro was also undermined by weaker risk conditions during the day.
The dollar secured significant defensive support, especially with weaker equity markets. EUR/USD dipped to 10-day lows at 1.0225 before correcting slightly. EUR/USD recovered to just above 1.0250 on Tuesday.
The yen was unable to gain support from weaker risk conditions. The dollar posted net gains despite a retreat in yields from intra-day highs. USD/JPY posted highs above 142.00 before a retreat to 141.75 on Tuesday.
Tighter domestic liquidity conditions underpinned the Swiss franc, especially with weaker risk appetite. EUR/CHF dipped to test the 0.9800 level while USD/CHF tested 0.9600 before correcting slightly.
Sterling was subjected to lacklustre conditions with weaker risk conditions undermining support. GBP/USD again tested support below 1.1800 before a recovery.
Commodity currencies were dragged lower by dollar gains and weaker equities. AUD/USD dipped below the 0.6600 level before edging higher to 0.6615 on Tuesday. USD/CAD strengthened to highs near 1.3500 as oil prices declined before a retreat to 1.3440 amid the reversal in crude.