Dollar Weakens, Markets Believe Fed Ready to Cut Interest Rates
The US dollar weakened on Monday (06/30/25), approaching its lowest level. This decline was triggered by increasing expectations that the Federal Reserve will cut interest rates in the near future. The Dollar Index fell 0.2% to 96.810, recording a sharp monthly decline of 2.6% in June.
The main cause was market optimism about the trade deal between the US, China and Canada. The Trump administration recently announced a deal with China, while Canada lifted a digital services tax to continue talks. European Commission President Ursula von der Leyen also said that a trade deal between the EU and the US could be reached before the July 9 deadline, which made the market more confident that global tensions would ease.
On the other hand, dovish comments from Fed Chair Jerome Powell strengthened expectations of an interest rate cut. He stated that a cut is likely if inflation remains low. Currently, the chance of a rate cut in September has jumped to 91.5%, according to the CME FedWatch Tool. Investors are also watching the Trump administration's massive spending bill, which is expected to add $3.3 trillion to the national debt over a decade.
Source: Newsmaker
