Dollar Dips Amid U.S. Trade Deal Optimism
The dollar declined against the yen and euro, reaching a near four-year low due to optimism over U.S. trade deals potentially prompting Federal Reserve rate cuts. Market sentiment, influenced by Fed Chair Jerome Powell's testimony, is leaning towards a rate reduction. Key U.S. data this week could sway expectations further.
The dollar slipped on Monday, experiencing significant declines against the yen and euro, influenced by optimism surrounding U.S. trade negotiations. The currency was also weak against sterling and the Swiss franc, as markets anticipated potential interest rate cuts by the Federal Reserve.
Market sentiment was impacted by Federal Reserve Chair Jerome Powell's recent Congressional testimony, interpreted as dovish. Powell indicated that rate cuts could occur if inflation remains subdued this summer, leading to a surge in bets for rate reductions by September. The Fed's upcoming rate-setting meeting next month further heightened market speculation.
In the week ahead, U.S. job data could significantly influence market expectations regarding the Fed's next actions. Meanwhile, President Trump's advocacy for lowering the benchmark rate persists, amid broader economic policy maneuvers including substantial proposed tax cuts and spending legislation, potentially affecting the national debt trajectory.
(With inputs from agencies.)
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