Dollar Weakens in Early Trade

9 Jul 2024 , 08:33 AM

On Tuesday, the US dollar remained near a multi-week low against key peers, still reeling from Friday’s surprisingly weak employment report, as traders awaited testimony from Federal Reserve Chair Jerome Powell for hints on the course of interest rates.

The euro maintained steady after Monday’s strong fluctuations as investors accepted a hung parliament in France, which points to future political deadlock but alleviates many economic concerns raised by far-right or leftist triumphs.

The US dollar index, which measures the currency against the euro, sterling, yen, and three other major rivals, was flat at 104.99 in early Asian hours, remaining near to the overnight low of 104.80, a three-and-a-half-week low.

The index fell 0.9% last week, exacerbated by Friday’s monthly payrolls report, which raised expectations that the Fed would soon begin slashing interest rates.

According to the CME Group’s FedWatch Tool, traders are now betting around 76% on a rate cut at the September meeting, up from 66% a week earlier. Another decrease is expected in December.

Chair Powell testifies before Congress for two days, beginning later on Tuesday with the Senate and continuing on Wednesday with the House.

Consumer pricing data on Thursday could also be important, according to market experts, with recent readings indicating a cooldown from unusually high levels at the start of the year.

The euro was little changed at $1.0827, close to Monday’s nearly four-week high of $1.0845. The single currency fell as low as $1.07915 on the same day.

Sterling remained unchanged at $1.28085 after reaching a high of $1.28455 on Monday, its highest level since June 12.

The yen held steady at 160.91 per dollar this week, having rebounded from Wednesday’s nearly 38-year low of 161.96.

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