Dollar regains strength amid expectations of interest rate hikes

The U.S. dollar maintained its stability against other major currencies Tuesday as more Federal Reserve officials spoke in favor of even tighter U.S. monetary policy.

Fed Vice Chair Lael Brainard on Monday backed recent messages from Fed Chairman Christopher Waller that interest rates should continue to rise as part of the fight against inflation, but potentially at a lower rate, Reuters reported.

Money markets currently believe that there is an 89% chance that the Federal Open Market Committee (FOMC) will lower the pace of rate hikes to half a point at its next meeting on December 14, while there is an 11% chance of another 75 basis point hike.

Rodrigo Catril, senior currency strategist at National Australia Bank, wrote in a note to clients that the Fed speaker(s) have set a direction, letting the markets know that more work needs to be done to normalize inflation. The U.S. dollar strengthened overall, while last week's leading gainers, the British pound and Japanese yen, topped the decline.