Dollar Falls as Traders Balance Ceasefire, Powell
A Bloomberg gauge of the dollar dropped amid a fragile ceasefire between Iran and Israel. The US currency trimmed losses after Federal Reserve Chair Jerome Powell said that the central bank is in no rush to lower borrowing costs.
The Bloomberg Dollar Spot Index falls 0.4% and trades off day’s low; still heads for its biggest daily decline since June 12 as options sentiment sours on US currency.
Powell in prepared remarks to Congress ahead of testimony later Tuesday: “For the time being, we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance”.
EUR/USD rises less than 0.1%, paring earlier advance but up for fourth session
Roughly 35bp jump in one-month risk reversals in favor of euro is sixth-most of last three years; now trade around 5bp over parity
Germany will borrow about a fifth more than planned in the coming months to fund a surge in spending, while a deal to secure a €46 billion ($53 billion) package of tax breaks highlighted how debt needs are set to grow.
Yen leads G-10 currency gains versus dollar alongside Antipodeans.
USD/JPY down 0.8% to 145.06; NZD/USD up 0.6% to 0.6014; AUD/USD gains 0.5% to 0.6493.
GBP/USD rallies by 0.5% to 1.3595, earlier at 10-day high; resistance set by June high at 1.3632.
One-week risk reversals trade at 12bps, puts over calls; the gauge traded earlier at 76bps and the move is the strongest in favor of sterling since October 2022.
USD/CAD down 0.2% to 1.3713; loonie holds gains after Canada YoY headline CPI in May comes in as expected at 1.7%.
Source: Bloomberg
