Why the U.S. Dollar Is Taking a Humorous Turn
After hitting its lowest point of the year, the dollar has begun to wobble, staying firmly in a bearish mood that might just keep moving forward.
Powell’s gentle nudge to the Fed
- Federal Reserve Chair Jerome Powell hinted that the next wave of rate cuts could be more dramatic than expected.
- He mused that we might see a cut earlier than we think — maybe even as soon as September, depending on how the job market holds up.
- His comments suggest that cutting interest rates will put additional pressure on the greenback.
What Happens Next?
Because investors are already factoring in a potential rate cut, Treasury yields have started to adjust. If the Fed does pull the rate back by 50 basis points, we could see yields take a further dip. Although the market is betting on a smaller cut (just 25 basis points) at the next meeting, the overall atmosphere remains tense.
Adding the PCE Twist
- The upcoming PCE inflation data might sway the dollar again—might lift it, or might press it down.
- As the Fed keeps a steady eye on the economy, the overall cycle of easing could keep the dollar and Treasury yields in a bit of a “lean” phase.
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