US dollar holds gains but does not advance

The dollar was nearly unchanged Wednesday but managed to hold on to recent gains as the chance of an interest rate cut early next year was thought to be dropping. The opinion that a rate cut is not in the cards came largely from remarks by Federal Reserve officials that indicated no inclination to drop rates even though the US housing market has been weak recently. Not all analysts, however, see the dollar as remaining strong and predicted a pressure toward deflation in the next year due to the decline in oil prices.

At midday in New York, the greenback was steady against both the euro and the Swiss franc, at $1.2540 and SFr1.2700 respectively, while it dropped 0.1 percent to ¥119.50 versus the Japanese yen.

Sterling was stronger on the session, adding 0.1 percent to £0.6755 in relation to the euro and 0.2 percent to $1.8570 versus the US dollar. The advances came after the governor of the Bank of England commented in a speech that investors should not overreact to September’s decline in inflation in the UK. The Bank of England is still expected to hike interest rates in November.

Declining oil prices led to weakness in the Norwegian krone and the Canadian dollar. The krone was 0.3 percent lower to Nkr6.707 to the dollar, while the Canadian dollar also dropped 0.3 percent to C$1.1361 to the dollar. Norway is the third-largest oil producer in the world, while Canada produces a number of raw materials.