US Dollar Tries to Recover After Powell's Dovish "Gut Punch"
The US dollar attempted to recover early in the Asian session after being hit by Fed Chairman Jerome Powell's dovish comments at Jackson Hole. Against the euro, the greenback edged up 0.2% to $1.1699 per euro, but remained near Friday's four-week low of $1.174225. The dollar also strengthened 0.1% to $1.3502 per sterling and 0.4% to ¥147.46, paring some of its earlier 1% decline.
On the commodity currency side, the Australian dollar briefly reached $0.6523 (a one-week high) before returning to $0.6484, after rallying 1.1% in the previous session. This movement reflects improved risk appetite following the Fed's easing signals, although volatility remains high.
Powell left the door open for a September interest rate cut, citing the risk of a downturn in the labor market that is growing and could occur quickly. The market is now pricing in an 80% chance of a 25 bps cut at the September 17 meeting, and a total of around 48 bps of cuts by the end of the year.
These bets rose earlier in the month due to weak payrolls data, but have since receded due to a warmer PPI and strong business activity surveys. Powell's speech revived easing expectations, but the dollar's rebound is likely limited until subsequent inflation and employment data provide clearer direction. (ayu)
Source: Newsmaker.id
