Dollar Recovers Ahead of Powell’s Remarks

Dollar Recovers gained ground in European trade on Monday against a basket of major rivals, poised to mark its first profit in four days. This resurgence is driven by haven demand following a failed assassination attempt on ex-President Donald Trump. These developments set the stage for an important speech later today in Washington by Federal Reserve Chair Jerome Powell
who will address inflation and the future of interest rates.

The Price

The dollar index rose by 0.25% to 104.32, with a session-low at 104.07. On Friday, the index closed down by 0.4%, marking its third consecutive loss and hitting a five-week low of 104.04. Over the past week, the index declined by 0.8%
registering its second weekly loss in a row due to increasing odds of two US interest rate cuts this year.

Impact of Trump’s Assassination Attempt

The failed assassination attempt on ex-President Donald Trump during a weekend rally has influenced investor behavior
boosting Trump’s odds of winning the upcoming elections. Investors view Trump’s flexible fiscal policies and support for raising tariffs as beneficial for the dollar but potentially weakening for US Treasury bonds.

US Rates

According to the Fedwatch tool, there is a 94% chance of a Fed rate cut in September and a 98% chance of such a cut in November. These expectations have contributed to the recent fluctuations in the dollar index.

Jerome Powell’s Remarks

Investors are now keenly awaiting Fed Chair Jerome Powell’s speech in Washington, DC, later today. Powell’s remarks will be closely analyzed for insights into the Federal Reserve’s policy direction, particularly regarding inflation and interest rates. The speech is expected to provide crucial signals that could influence market movements in the near term.

In summary, the US dollar’s recent recovery influenced by heightened political tensions and anticipations surrounding Jerome Powell’s upcoming speech. Investors are looking for guidance on the future of US monetary policy amidst ongoing economic uncertainties.

FAQs

  1. Why did the dollar recover on Monday? The dollar recovered due to haven demand following a failed assassination attempt on ex-President Donald Trump and in anticipation of Fed Chair Jerome Powell’s upcoming speech.
  2. What is the significance of Jerome Powell’s speech? Jerome Powell’s speech is significant as it expected to provide insights into the Federal Reserve’s future policy direction regarding inflation and interest rates.
  3. How did the assassination attempt on Trump affect the dollar? The failed assassination attempt increased Trump’s odds of winning the elections
    which investors view as beneficial for the Dollar Recovers due to his flexible fiscal policies and support for raising tariffs.
  4. What are the current odds of US interest rate cuts? According to the Fedwatch tool, there a 94% chance of a rate cut in September and a 98% chance of a cut in November.
  5. Why did the dollar index decline last week? The dollar index declined last week due to the increasing odds of two US interest rate cuts this year
    which influenced investor expectations and market movements.