Economic Trends And Powell’S Comments Drive Dollar Down

(MENAFN- The Rio Times) The US dollar faltered slightly against the Brazilian real, settling at R$5.4126 last Wednesday, a modest decline of 0.04%.

Earlier that day, it had sunk to R$ 5.3731, its lowest since mid-June, reflecting a broader softening by 0.77%. This move aligns with global currency shifts.

The DXY Index, which measures the dollar against six major currencies, also fell slightly by 0.08%.

In Brazil, cooling inflation in June caught the market's eye, suggesting fewer rate increases ahead. Economists believe this trend may keep the Selic rate steady through the year's end.

Jerome Powell, chair of the Federal Reserve , voiced uncertainties about inflation's return to the 2% goal, though he harbored some optimism.

He cautioned that prolonged high interest rates could restrain economic expansion. He advised against waiting for inflation alignment before adjusting monetary policies.

Post-Powell 's statements, traders wagered on US rate cuts by September, a scenario 75.2% likely, according to the FedWatch tool.

These potential rate adjustments might devalue the dollar further. As rates drop, Treasury yields usually fall, making the dollar less attractive.

This illustrates a direct link between Fed decisions and everyday financial market movements, highlighting the delicate balance central banks maintain to foster economic stability.


The Rio Times

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