Dollar Weakens, Market Predicts Fed Will Cut Rates in September

7월 18일

The US dollar fell against major currencies in New York trading on Wednesday (July 17), pressured by expectations that the US Federal Reserve ( Fed ) will cut interest rates.

Meanwhile, the dollar index, which measures the greenback against a basket of six major currencies, fell 0.5% to 103.747.

The US dollar fell to 156.10 yen from 158.35 yen late Tuesday and fell to 0.8836 Swiss franc from 0.8943 franc. However, the dollar rose to 1.3690 Canadian dollars from 1.3679 Canadian dollars.

The euro rose to $1.0937 from $1.0896 on Tuesday, while the pound rose to $1.3006 from $1.2969.

Investors are now almost 100% betting on the Fed's first rate cut of the year in September, following signals from Fed Chair Jerome Powell and after the U.S. reported a weaker-than-expected consumer price index (CPI).

Christopher Waller, a member of the Fed's Board of Governors and a permanent member of the Federal Open Market Committee (FOMC), has signaled that the Fed is set to cut interest rates in September.

"I believe the data so far is consistent with a slowdown in the U.S. economy without a recession, and I will look to the next two to three months of data to gain more confidence in that view. So while I don't believe we're at the final destination, I do believe we're approaching the right time to cut rates," Waller said.

Waller's remarks suggested the Fed would keep rates on hold at this month's meeting, with a September rate cut likely.

The yen strengthened against the dollar amid speculation that Japanese authorities may intervene in the foreign exchange market to support the currency, which would be the second consecutive week of such intervention.

In economic data reported last night, the Federal Reserve (Fed) revealed that overall US industrial production rose 0.6% in June, compared to the previous month, after increasing 0.9% in May. On a year-on-year basis, industrial production rose 1.6% in June.

The Commerce Department said housing starts rose 3% to a seasonally adjusted annual rate of 1.353 million units in June, above the 1.3 million estimate by economists. Housing starts fell 4.4% year-on-year in June.