Dollar Jumps Most in Nearly Four Weeks, Peers Fall
The dollar advanced by the most since July 30 as euphoria around potential Federal Reserve interest-rate cuts faded ahead of a key inflation reading later this week. All currencies in the Group of 10 traded weaker against the greenback.
The Bloomberg Dollar Spot Index rose 0.5% Monday after closing 0.8% lower on Friday as Fed Chair Jerome Powell delivered his strongest signal yet that he’s ready to end an eight-month pause in lowering rates.
“I’m inclined to believe, now that the dust has settled, that nothing has changed,” wrote Brent Donnelly, president of Spectra Markets. “We continue to await Core PCE, NFP and CPI. Then, the Fed will decide what to do, while applying a dovish filter to the data”
“That is, the bar to hold in September is high now, but 3/3 hot data points could still make no cut a reality,” he said.
Traders are now waiting for the report later this week on the Fed’s preferred measure of underlying inflation, which probably ticked higher last month.
EUR/USD fell almost 1% to 1.1607.
“It seemed to be French political noise that sent the French vs. German spreads wider and hit the EUR/USD as well,” said Brad Bechtel, global head of FX at Jefferies. Summer holiday markets are “helping to make it look bigger than it otherwise might have been”.
USD/JPY climbed 0.6% to 147.87.
Bank of Japan Governor Kazuo Ueda said he expects a tight labor market to keep upward pressure on wages, reflecting his view that stable inflation is set to take hold.
GBP/USD dropped 0.6% to 1.3448.
AUD/USD declined 0.2% to 0.647.
Source: Bloomberg
