LONDON—The U.S. dollar trimmed early losses and held near a 20-year peak on Tuesday while its rivals from the Aussie to the euro struggled as traders braced for aggressive interest rate hikes from the Federal Reserve this week.
Expectations for a 75 basis-point increase at the conclusion of a two-day meeting on Wednesday are nearly baked into prices, according to CME’s Fedwatch Tool with investment banks like Goldman Sachs expecting a 75 basis-point rate hike in June and July, and a 50 basis-point rise in September.
A 75 basis-point increase would be the biggest since 1994 and with world stock markets nursing deep losses, the dollar’s appeal as a safe-haven asset is also boosting its allure….