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(Source: Bloomberg) – The dollar slumped the most in one month as upheaval in China’s stock and currency markets weighed on the outlook for higher interest rates in the U.S.

The greenback weakened to its lowest level in almost a year versus the yen after a 7 percent rout in China’s equity markets curtailed trading for the second time in four days. China’s foreign-exchange reserves slid more than forecast in December, capping their first-ever annual decline, prompting speculation that authorities are selling dollars to prop up the currency. Shorter-term U.S. debt yields declined and futures contracts show a 43 percent probability of a U.S. interest-rate rise by April, down from 56 percent on Dec. 31.

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Erik Sandstrom
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