Dollar falls in early trade

16 Jul 2024 , 09:28 AM

The dollar remained at five-week lows on Tuesday as comments from Federal Reserve Chair Jerome Powell boosted the argument for a September rate cut, while cryptocurrency climbed on increased prospects of US President Donald Trump’s reelection.

Powell stated on Monday that three U.S. inflation readings from the second quarter of this year “add somewhat to confidence” that the rate of price increases is returning to the Fed’s objective in a sustainable manner.

“We’ve had three better readings, and if you average them, that’s a pretty good place,” Powell said during an event at the Economic Club of Washington.

Powell’s comments, which are likely to be his last until his news conference following the Fed’s July 30-31 meeting, changed expectations for rate cuts. According to the CME FedWatch tool, markets now anticipate 68 basis points of easing this year, with a September rate decrease completely factored in.

The euro was slightly lower at $1.0893, while sterling last traded at $1.2967. The dollar index, which measures the US dollar against six other currencies, was at 104.3, not far from its one-month low of 104 on Monday.

Retail sales in the United States are likely to fall by 0.3% month on month in June, according to data to be released later today.

Meanwhile, the yen was down in early trading after reaching a one-month high of 157.165 per dollar on Monday. It was last at 158.54, with traders apprehensive of more action by Japanese authorities.

Traders assume Tokyo intervened in the market last week in another attempt to boost the Japanese yen following a lower-than-expected US inflation report. According to data from the Bank of Japan, officials may have spent up to 3.57 trillion yen to support the weak yen.

Markets will be looking for new money market data to see if Tokyo interfered on Friday as well.

In cryptocurrency, bitcoin climbed 1% to trade just shy of $65,000, its highest level in a month. Ether was up 1% to $3,466 at its two-week high.

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