Dollar Under Pressure; Fed Signals Key Focus
The US dollar remained under pressure during Wednesday's trading (August 19) as a decline in Treasury yields created room for risk assets and major currencies to strengthen. The dollar spot index fell approximately 0.2% to the 99.48 area, hovering near its lowest level since June 5, 2026.
Pressure on the greenback mounted following a series of US economic data releases showing signs of cooling. Softer-than-expected CPI inflation and an unexpected contraction in July payrolls led markets to further scale back expectations for Federal Reserve interest rate hikes in the coming months.
Bond markets also showed signs of stabilizing. The 10-year US Treasury yield fell to around 4.68%, while the 30-year yield eased to 5.27%. This decline in yields reduced the dollar's appeal and helped drive capital flows back into various global assets.
Market attention is now focused on the minutes from the July FOMC meeting. Investors will be scrutinizing whether the 9-3 decision to hold interest rates in the 3.50%–3.75% range signals a Fed inclination to keep rates steady for longer, or indicates that the hawkish faction retains significant influence amidst inflation risks stemming from rising energy prices.
The dollar's weakness has supported other major currencies. The euro strengthened by about 0.2%, while the pound sterling rose toward US$1.3520. In Asia, the Japanese yen traded around 159.22 per dollar, remaining close to the psychological 160 level—a threshold that heightens vigilance regarding potential renewed intervention by Japanese authorities.
Newsmaker Analysis: The US dollar is likely to remain on the defensive as long as Treasury yields soften and expectations for Fed rate hikes continue to decline. However, the FOMC minutes represent the next major catalyst. Should the minutes reveal a more hawkish tone, the dollar could rebound from its current lows. Conversely, if the Fed appears increasingly inclined to maintain interest rates, pressure on the dollar could persist, providing additional room for the euro, the pound sterling, and other major currencies. (arl)
Source: Newsmaker.id
