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Dollar falls to 3-week low as Federal reserve signals drop, Japan Bank hint at tightening
(MENAFN) On Monday morning, the dollar experienced a decline, reaching a three-week low against the yen. This drop came in the wake of Federal Reserve Chairman Jerome Powell's recent shift towards a more dovish monetary policy stance. Powell’s comments contrasted sharply with those of bank of Japan Governor Kazuo Ueda, who has been advocating for monetary tightening. This divergence in monetary policy perspectives contributed to the dollar’s weakened performance.
The dollar also approached a 13-month low against the euro and fell against the pound, reaching levels not seen since March 2022. This movement followed remarks by Bank of England Governor Andrew Bailey, who suggested that it was premature to claim victory over inflation, thereby hinting at a potentially softer approach from the Federal Reserve regarding interest rate cuts. The dollar fell approximately 0.66 percent to 143.45 yen, marking its lowest point since early August, and subsequently declined by 0.31 percent by 0517 GMT.
Tapas Strickland, head of market economics at National Australia Bank, noted that Powell's recent speech was marked by stronger language compared to previous communications. This shift, which notably excluded terms like "gradual," suggests the possibility of further rate cuts. In contrast, Ueda’s comments in Tokyo highlighted the Bank of Japan’s need to adjust its easing measures, with market participants anticipating potential rate cuts by the Federal Reserve on September 18, according to the CME Group's FedWatch tool.
The dollar also approached a 13-month low against the euro and fell against the pound, reaching levels not seen since March 2022. This movement followed remarks by Bank of England Governor Andrew Bailey, who suggested that it was premature to claim victory over inflation, thereby hinting at a potentially softer approach from the Federal Reserve regarding interest rate cuts. The dollar fell approximately 0.66 percent to 143.45 yen, marking its lowest point since early August, and subsequently declined by 0.31 percent by 0517 GMT.
Tapas Strickland, head of market economics at National Australia Bank, noted that Powell's recent speech was marked by stronger language compared to previous communications. This shift, which notably excluded terms like "gradual," suggests the possibility of further rate cuts. In contrast, Ueda’s comments in Tokyo highlighted the Bank of Japan’s need to adjust its easing measures, with market participants anticipating potential rate cuts by the Federal Reserve on September 18, according to the CME Group's FedWatch tool.
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