Fed may find solace in weaker dollar after hike

A stronger dollar contributed to already plunging commodity prices and hit U.S. exports. Revenues of multinational corporations were also dented. Economic growth slowed, while worries about inflation turned into worries about deflation.

That was clearly not ideal for the Fed. But next month the Fed might get its goldilocks reaction from the financial markets. The stock market no longer sees a rate increase as a threat, climbing in the face of increasing odds of a December move. Treasurys have also rallied over the past several days, suggesting investors are betting on a slow pace of future hikes once the Fed begins liftoff.

Meanwhile, the dollar, which had run up about 7% against the euro EURUSD, -0.1863% and 3% against the yen USDJPY, +0.00% since mid-October, fell after release of the minutes from the Federal Reserve’s October meeting.

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