Dollar drifts as Powell comments bring September rate cut in focus
Federal Reserve Chair Jerome Powell bolstered the case for a rate cut in September, while cryptocurrenices gained on rising odds of former President Donald Trump getting reelected.
Powell said on Monday the three U.S. inflation readings over the second quarter of this year «add somewhat to confidence» that the pace of price increases is returning to the Fed's target in a sustainable fashion.
«We've had three better readings, and if you average them, that's a pretty good place,» Powell said at an event at the Economic Club of Washington.
The comments, likely Powell's last until his press conference following the Fed's July 30-31 meeting, shifted rate cut expectations. Markets are now anticipating 68 basis points of easing this year, with a rate cut in September fully priced in, CME FedWatch tool showed.
The euro was a shade lower at $1.0893, while sterling last fetched $1.2967. The dollar index, which measures the U.S. unit versus six peers, was at 104.3, not far from the one month low of 104 it touched on Monday.
«Despite dovish inclinations, Powell remained in a data-dependent mode which is warranted after the Fed has burnt its fingers with inflation running back higher in Q1 after a dovish pivot at the end of 2023,» said Charu Chanana, head of currency strategy at Saxo.
«Markets may need to wait longer for the confirmation of their September rate cut hopes, and growth and labour data will be on the radar such as retail sales today.»
U.S. retail sales for June due later in the day are expected to show a
