Dollar Strengthens on Fed Hints

26 Sep 2024 , 12:03 PM

The dollar remained firm on Thursday after its largest surge since early June, as traders anticipated speeches from key Federal Reserve governors later in the day for hints on the pace of interest rate decreases.

While there was no evident cause for the comeback, investors appeared to adopt a more nuanced view on how aggressive future U.S. rate cuts would be, with Fed speakers this week unable to give a cohesive stance on the way forward.

Sterling was unchanged at $1.33425. On Wednesday, it reached $1.3430 for the first time since February 2022.

Fed Governor Adriana Kugler said on Wednesday that she “strongly supported” the decision to drop interest rates by half a percent earlier this month to kick off the easing cycle, but she did not discuss her views for the pace of future reductions.

Earlier this week, Chicago Fed President Austan Goolsbee stated that policymakers “can’t be behind the curve” if the economy is to experience a smooth landing. Atlanta Fed President Raphael Bostic said the central bank does not need to embark on a “mad dash” to cut interest rates.

The dollar index, which compares the currency to the euro, sterling, yen, and three other major peers, fell 0.10% to 100.84, following a 0.57% increase on Wednesday, the largest one-day rise since June 7.

The euro was barely changed at $1.1143 after falling dramatically from $1.1214, its highest level since July of last year.

The yen touched a three-week low of 145.04 per dollar and last traded at 144.77.

The minutes of the Bank of Japan’s July meeting, when the central bank lifted short-term interest rates, revealed policymakers were divided on how rapidly the central bank should raise rates further.

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