Dollar Dips Amid Fed Rate Cut Speculations and Trump's Influence

The dollar experienced a setback on Thursday as traders ramped up bets on a potential Federal Reserve interest cut next month. This followed a statement from New York Fed chief John Williams suggesting such a move could be plausible. Additionally, the currency faced pressure from President Donald Trump's campaign to exert increased sway over monetary policy.

Trump's attempts to oust Lisa Cook, one of the Fed governors, particularly strained the currency. Markets are now pricing in an approximately 84% probability of a quarter-point rate cut next month, according to LSEG data. Moreover, the dollar index saw a decline of 0.17% to 97.952, continuing two days of losses.

In response to these developments, the euro rose to $1.1665, and the yen saw the dollar slip by 0.3% to 146.88 yen. Meanwhile, Japan postponed an announcement regarding a significant investment pledge in the United States, potentially affecting international trade dynamics.

(With inputs from agencies.)