U.S. Dollar Higher As Hopes For Aggressive Fed Rate Cuts Wane
26 June 2019 - 8:18PM
RTTF2
The U.S. dollar spiked higher against its key counterparts in
the European session on Wednesday, as hopes for a rate cut in July
receded after Fed Chairman Jerome Powell remarked that the central
bank is "insulated from short-term political pressures."
Speaking in New York on Tuesday, Powell remarked that the Fed is
independent, insulated from short-term political pressures.
Powell resisted President Donald Trump's call to cut interest
rates, saying that monetary policy should not overreact to any
individual data point or short-term swing in sentiment.
Separately, St. Louis Fed President Jim Bullard, a well-known
policy dove, said that a 50 basis point rate cut in July would be
too much.
"I don't think we have to take huge action," Bullard told in an
interview on Bloomberg.
Data from the Commerce Department showed that new orders for
U.S. manufactured durable goods unexpectedly fell sharply in
May.
The durable goods orders tumbled by 1.3 percent in May after
plunging by a revised 2.8 percent in April.
The currency has been trading higher against its most major
rivals in the Asian session following Fed comments.
The greenback strengthened to a 5-day high of 0.9785 against the
franc, from Tuesday's closing value of 0.9755. The currency is seen
finding resistance around the 1.00 level.
The greenback that finished Tuesday's New York session close at
107.16 against the yen firmed to a 6-day high of 107.76. If the
currency rises further, 111.00 is possibly seen as its next
resistance level.
The U.S. currency ticked higher to 1.1351 against the euro and
held steady thereafter. At yesterday's close, the pair was worth
1.1366.
Survey data from market research group GfK showed that Germany's
consumer sentiment is set to weaken in July as income expectations
suffer significant setbacks amid fears of job losses among
shoppers.
The forward-looking consumer sentiment index dropped
more-than-expected to 9.8 in July from 10.1 in June. The score was
forecast to fall marginally to 10.0.
The greenback rose back to 1.2664 against the pound, a pip short
of a 6-day high of 1.2663 seen at 3:00 am ET. The next possible
resistance for the greenback is seen around the 1.24 area.
The JobsOutlook survey by the Recruitment & Employment
Confederation showed that UK employers' confidence on the economy
and their hiring and investment intentions improved since the
extension of the Brexit deadline.
Employers' confidence in making hiring and investment decisions
improved with the index rising 4 percentage points to positive
1.
On the flip side, the greenback weakened to near a 4-month low
of 1.3142 versus the loonie and more than 2-week low of 0.6995
against the aussie from yesterday's closing values of 1.3169 and
0.6960, respectively. On the downside, 1.30 and 0.72 are likely
seen as the next support levels for the greenback against the
loonie and the aussie, respectively.
The greenback also fell to more than a 2-month low of 0.6686
against the kiwi, from an early 2-day high of 0.6593. Further
downtrend may take the greenback to a support around the 0.68
region.
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