Dollar firms as traders rethink rate cut bets – Money News
SINGAPORE (Reuters) -The U.S. greenback (DX=F) firmed on Friday and was poised for a sturdy weekly efficiency as buyers reassessed rate cut wagers forward of an eagerly anticipated speech from Federal Reserve Chair Jerome Powell that might form the near-term financial coverage path.
A delicate July jobs report coupled with large downward revisions to hiring in May and June bolstered hopes of an imminent discount in borrowing prices, with traders at one level even pricing in a jumbo rate cut for the subsequent assembly in September.
But since then cautious feedback from different policymakers and financial information flashing inflationary dangers have tempered these expectations. Traders are actually pricing in a 75% probability of a 25-basis-point rate cut in September, down from 92% a week earlier, CME FedWatch software confirmed.
Fed officers appeared lukewarm on Thursday to the concept of a rate cut subsequent month, setting the stage for Powell’s speech on the annual Jackson Hole convention in Wyoming, which kicked off on Thursday.
“Powell is unlikely to pre-commit to a September cut,” mentioned Charu Chanana, chief investment strategist at Saxo. “The Fed has a dual mandate, but right now inflation outweighs labour as the bigger risk.”
“With another inflation and payrolls print still due before the September meeting, Powell has every reason to stay patient and keep optionality open,” Chanana mentioned.
That would possibly go away the greenback susceptible after a regular however unspectacular rise prior to now week.
The euro hit its lowest stage since August 6 and was final at $1.1583.
The single currency, which has benefited in 2025 from the greenback’s decline, is down 0.8% for the week. For the 12 months, it’s nonetheless up 12%.
Sterling was regular at $1.3402, down 1% for the week.
The greenback index (DX-Y.NYB), which measures the U.S. currency in opposition to six rivals, was at 98.75, on track for a 0.9% rise within the week, snapping its two-week shedding streak.
Market pricing for a September rate cut units a high bar for Powell to ‘out-dove’ the market, in accordance with Joseph Capurso, head of worldwide and sustainable economics at Commonwealth Bank of Australia.
“We expect a larger lift in the dollar if Powell challenges current high market pricing of a 25 bps September cut. Put another way, the dollar faces asymmetric risks with greater upside potential than downside,” Capurso mentioned.
The yen eased to 148.63 per greenback, poised for a 1% decline for the week. Data confirmed core inflation in Japan slowed for a second straight month in July however stayed above the central bank’s 2% goal, holding alive expectations for a rate hike within the coming months.
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