Dollar Sinks as Powell Opens Door to September Cut
A Bloomberg gauge of the dollar sank on Friday after Federal Reserve Chair Jerome Powell raised the prospect of an interest-rate cut in September in remarks at Jackson Hole. The yen and euro each rallied at least 1%, their best performance since Aug. 1.
The Bloomberg Dollar Spot Index falls 0.8% and trades on the cusp of three weeks of losses
“The stability of the unemployment rate and other labor market measures allows us to proceed carefully as we consider changes to our policy stance,” Powell said in prepared remarks
“Nonetheless, with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance”
US 2-year yield falls 10bp to 3.69%; swaps traders price in some 80% chance of 25bp easing by Fed’s September meeting
The dollar took leg lower after President Donald Trump said he would fire Fed Governor Lisa Cook if she does not resign
Elsewhere, Fitch affirms US credit rating at AA+ and says outlook stable
EUR/USD rallies 1.2% to 1.1743 day’s high
The pair saw good volumes in the 15 minutes after Powell’s text was released, including corporate demand for euro: traders
The yen gains as much as 1.2% to USD/JPY 146.58
Earlier, the pace of Japan’s consumer inflation stayed well above the Bank of Japan’s 2% target even as price growth moderated
One-week implied vols on dollar-yen rise to some 7.8% earlier, highest intraday in a week
Risk-sensitive Aussie, Scandies lead G-10 gains versus dollar
AUD/USD rallies 1.1% to 0.6488
Source : Bloomberg
