Dollar Dips as Fed's Powell Hints at Possible Rate Cut Action
The dollar weakened after Federal Reserve Chair Jerome Powell suggested a potential rate cut at the next meeting. The speculation led to the dollar index dropping by 0.96%. Markets are now anticipating an 85% chance of a rate cut, influenced by employment concerns and political pressure on the Fed.
The U.S. dollar took a hit on Friday, following remarks from Federal Reserve Chair Jerome Powell, hinting at a possible rate cut in September, although he stopped short of confirming any immediate action. The dollar index fell 0.96% to 97.66, after trading above 98.7 earlier in the day.
The euro surged to its highest since July, while the dollar slipped against the yen. Powell addressed the labor market, noting unusual activity that suggests rising employment risks. He emphasized the need for caution in data interpretation during the Fed's annual Jackson Hole conference.
Speculation grew as traders priced in an 85% likelihood of a September rate cut. Political tensions also rose, with President Trump threatening Fed independence by suggesting the dismissal of Governor Lisa Cook. The dollar's fall represents its most significant drop against major currencies since August 1.
(With inputs from agencies.)
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