Dollar falls on interest rate cut speculation, Kiwi gains on inflation data

7/17/2024 4:15:41 AM

(MENAFN) On Wednesday, the U.S. dollar experienced a broad decline following a brief rebound, which was initially spurred by better-than-expected U.S. retail sales data. Traders quickly refocused on the possibility of the Federal Reserve cutting interest rates by September, overshadowing the initial optimism. This shift in sentiment allowed the New Zealand dollar to rise, bolstered by data indicating domestically driven inflation continued to climb in the second quarter, even though the headline figure fell short of expectations. Specifically, the New Zealand dollar appreciated by 0.35 percent to USD0.6071. Despite this, futures markets suggested that traders still anticipated about three interest rate cuts from the Reserve Bank of New Zealand within the year.

In the broader forex market, the dollar's inability to maintain gains post-U.S. retail sales data on Tuesday reflected robust consumer demand in the U.S. and an improved economic growth outlook for the second quarter. Consequently, the euro edged up by 0.06 percent to USD1.0906, and the Australian dollar saw a 0.1 percent increase to USD0.6740. The dollar index, which benchmarks the U.S. currency against a basket of six major currencies, dipped slightly to 104.19. Market expectations, as measured by the CME FedWatch tool, leaned towards the U.S. Federal Reserve cutting interest rates in September, with projections of a cumulative cut exceeding 60 basis points by year-end.

Meanwhile, sterling remained relatively stable at USD1.2972, as market participants awaited UK inflation data due later on Wednesday. The Japanese yen held steady at 158.34 per dollar, with traders remaining cautious about potential intervention by Japanese authorities following suspected significant interventions last week. Data from the Bank of Japan, released Tuesday, suggested that Tokyo might have expended approximately 2.14 trillion yen (USD13.5 billion) in intervention efforts on Friday alone. Including estimated expenditures from the previous Thursday, Japan was suspected of purchasing nearly 6 trillion yen over the course of the last week.

MENAFN17072024000045015682ID1108448703

Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.