Dollar Rebounds After Touching 2025 Low as Fed Cuts Rates
The dollar recovered after hitting a 2025 low as the Federal Reserve cut interest rates on a weakening job market.
The Bloomberg Dollar Spot Index traded 0.2% higher after dropping as much as 0.4% Wednesday to its lowest level since March 2022. The gauge traded between gains and losses as Fed Chair Jerome Powell said that the risk to persistent inflation should be managed, while explaining that there are signs of a cooling labor market.
“Powell shared a more balanced outlook with mention of inflation risks and no active consideration of 50 basis-point cuts helped the dollar,” said Jayati Bharadwaj, a strategist at TD Securities.
The Fed held its meeting amid signs of a weakening job market and mounting pressure from President Donald Trump to lower rates. Powell’s remarks Wednesday were less dovish than his speech last month at the Jackson Hole symposium, which helped to boost expectations for rate cuts.
US job growth cooled notably in August with the unemployment rate rising to the highest level since 2021, fanning concerns the labor market may be on the cusp of a more significant deterioration. In addition, data released last week showed that US job growth was far less robust in the year through March than previously reported.
Source: Bloomberg.com
