In this article by Kevin Buckland and Brigid Riley, we see the U.S. dollar firming against major peers after Federal Reserve Chair Jerome Powell hints at smaller interest rate cuts in the future. The yen stabilizes amidst volatility as Japan's incoming prime minister takes office, while Australia's dollar edges higher following positive retail sales data.
Powell's speech at a conference in Tennessee suggests that the Fed will likely stick to quarter-percentage-point rate cuts moving forward. Market analysts believe that while another rate cut is expected in November, the chances of a 50 basis-point reduction have decreased. Powell's remarks come ahead of crucial U.S. data releases this week, including manufacturing and non-manufacturing reports, as well as monthly jobs figures.
If the upcoming data exceeds expectations, the dollar could see a temporary rise before resuming its downward trend. The greenback currently stands at 100.82 against a basket of currencies, while the yen trades at 144.27.
As Japan prepares for a new premier, Shigeru Ishiba, markets anticipate a continuation of monetary policy. The euro remains steady following German inflation data, while the Australian dollar retraces towards recent highs after strong retail sales numbers.
In summary, Powell's comments suggest a more cautious approach to rate cuts, impacting currency markets globally. Traders should monitor upcoming data releases for potential market movements and adjust their strategies accordingly.