Dollar holds steady as Fed outlook mulled

The dollar index was little changed around 99.6 on Wednesday, holding gains from earlier in the week amid tempered expectations for a near-term Federal Reserve interest rate cut, as investors awaited key economic data for guidance.

Markets now price in roughly a 47% chance of a 25 basis point rate reduction in December, down from over 90% a month ago.

Several Fed officials cautioned against further cuts amid inflationary risks, though Governor Christopher Waller reiterated support for easing rates given signs of labor market weakness.

The latest Labor Department data showed initial jobless claims at 232K for the week ended October 18, with continuing claims at 1.957 million, the highest since August.

The highly-anticipated September jobs report will be released on Thursday. Markets will also watch earnings from major US retailers for clues on consumer spending.