The US currency is on track to close a month lower as investors heeded Jerome Powell’s speech.
He global dollar fell and the pound sterling rose to its highest level in more than two years on Friday after the president of the Federal Reserve (Fed), Jerome Powell, gave a speech with clear signals that the expected interest rate cut in USA will occur next month.
At the Kansas City Federal Reserve’s annual economic conference in Jackson Hole, Wyoming, Powell said that “the time has come to adjust policy” given the upside risks to the inflation decreased and the downside risks for the employment increased, which anticipates a rate cut in September.
He euro and the yen They rose, weakening the dollar index, which measures the greenback against a basket of six currencies, including both, fell 0.81% since the end of Thursday to 100.64.
The pound sterling, Meanwhile, it rose 0.94% to $1.3211, hitting a more than two-year high against the dollar on Powell’s remarks. The euro rose 0.75% to $1.1195, while the dollar/yen fell to its lowest level since Aug. 6, ending the day down 1.36% at $144.27.
The influence of Jerome Powell’s comments
“We neither seek nor welcome a further cooling of labor market conditions,” he said. Powell in Jackson Hole and said: “We will do everything possible to support a strong labor market as we move towards price stability.”
“With an appropriate reduction in political restraint, there is good reason to think that the economy will return to a inflation of 2% while maintaining a strong labor market,” he anticipated.
Traders on Friday continued to bet on a quarter-percentage-point rate cut at the Fed’s Sept. 17-18 meeting, putting the odds at 65% after Powell’s remarks. But they priced in a one-in-three chance of a larger 50-basis-point cut, compared with a slightly more than one-in-four chance before.
Source: Ambito
