Dollar on defensive as September Fed cut bets ramp up
The dollar struggled to make headway against major peers on Thursday as traders added to bets for a Federal Reserve interest rate reduction next month after New York Fed chief John Williams signaled a cut was possible.
The U.S. currency is also under renewed pressure from President Donald Trump's ramped-up campaign to exert more influence over monetary policy decisions, as he attempts to fire Fed Governor Lisa Cook and replace her with a loyalist.
The dollar was on the back foot against the euro even after France's prime minister on Monday unexpectedly called a confidence vote for next month, which is likely to result in the fall of his minority government.
The dollar index , which gauges the currency against six major peers, was steady at 98.145, following two days of declines.
The euro was little changed at $1.1640, and sterling edged up slightly to $1.3505.
The dollar slipped 0.14% to 0.8015 Swiss franc , while sliding 0.19% to 147.11 yen.
Japan's chief trade negotiator Ryosei Akazawa canceled a trip to Washington at the last minute on Thursday, delaying an announcement of the details of Japan's $550 billion investment pledge in the United States as part of a tariff deal.
A government spokesperson said the decision was taken after talks with the U.S. side revealed some points that need further discussion "at the administrative level".
On the U.S. monetary front, the Fed's Williams said in an interview with CNBC on Wednesday that "every meeting is, from my perspective, live."
"Risks are more in balance," he said. "We are going to just have to see how the data play out."
Key among data releases ahead of the Fed's September 16-17 policy meeting is the PCE price index on Friday - the Fed's preferred inflation measure - and the monthly payrolls report a week later.
Traders currently lay around 89% odds of a quarter-point rate cut next month, and have priced in a cumulative 55 basis points of easing by year-end, according to LSEG data.
That helped send two-year Treasury yields , which are extremely sensitive to policy expectations, sliding to the lowest level since May 1 overnight, adding to pressure on the dollar.
President Trump's push to place hand-picked, dovish-leaning candidates into the central bank's decision-making committee also pulled short-term yields lower, even though his attack on Governor Cook could spark a protracted legal battle after she sued to keep her job.
The dollar edged 0.03% lower to 7.1495 yuan in offshore trading .
The Australian dollar was steady at $0.6507, following a 0.4% climb over the previous two sessions.
Source : Reuters
