Dollar Falls Amid Rush of Fed Speakers; Loonie Lags
The dollar traded slightly weaker Monday as traders pore over comments by several Federal Reserve speakers. The Canadian dollar was lagging behind peers.
The Bloomberg Dollar Spot Index is down 0.2%
It was the first decline after three days of advances
Fed Governor Stephen Miran laid out his argument for aggressively lowering interest rates on Monday, presenting a view that aligns with the president’s demands but which makes him an outlier at the central bank
Also Monday, Fed’s Alberto Musalem said that there is limited room for more rate cuts, while Fed’s Bostic sees little reason to lower rates
“Musalem, Bostic, and Hammack were leaning on the more hawkish side,” said Macquarie’s Thierry Wizman. “I am surprised that the USD is weakening and stocks are rising. It seems as if no one really believes the Fed or Powell when they admonish the market for thinking that there are 4-5 more rate cuts on the way”
“Cyclical factors” to help dollar heading into year end, said Aroop Chatterjee, a strategist at Wells Fargo, while warning that “further deterioration in fundamentals or Fed institutional credibility could renew downward pressure” next year
“If the Fed retains operational independence, the USD may remain resilient,” he said. “However, if the administration succeeds in reshaping the FOMC’s voting balance, markets could increasingly price in a compromised Fed in 2026”
EUR/USD gained 0.4% to 1.1797
USD/JPY dropped 0.2% to 147.72; hedge funds added to bearish yen bets during the week ending Sept. 16, Commodity Futures Trading Commission data show
Charts and options suggest the pair may be ahead of an inflection
UBS Investment Bank raised its USD/JPY forecast to 143 at the end of the year, from its previous call for 130
Political uncertainty has been one factor for markets believing that the BOJ will maintain a dovish stance despite rising inflation risks, according to strategists at the UBS unit
AUD/USD edged 0.1% higher to 0.6600; Reserve Bank of Australia Governor Michele Bullock said the central bank has “made really good progress” on inflation
USD/CAD climbed 0.3% to 1.3823
The Canadian dollar was the worst performer among peers in the Group of 10 against the greenback Monday
Source : Bloomberg.com
