U.S. Dollar Falls As Fed Rate Cut Likely This Month
22 July 2019 - 8:25PM
RTTF2
The U.S. dollar declined against its major counterparts in the
European session on Monday, as investors focused on upcoming
interest rate cut by the Federal Reserve, even as hopes for
aggressive easing have faded following comments by officials from
the central bank.
CME Group's FedWatch Tool currently indicates a 75.5 percent
possibility for a 25 basis-point rate cut at its next meeting at
the end of July.
The Wall Street Journal reported on Friday that Fed officials
are likely to lower interest rates by a quarter-percentage point
later this month and may pursue further cuts in the future given
slowing global growth and trade uncertainty.
Hopes for larger rate cuts tempered after St. Louis Fed
President James Bullard suggested that an aggressive easing measure
was inappropriate in the current circumstances.
This came after the New York Fed President John Williams
dismissed the likelihood of a large interest rate cut at the
meeting later this month.
With today's economic calendar being light, traders await
reports on new and existing home sales, durable goods orders and
second quarter GDP due this week for more direction.
The currency traded mixed against its major counterparts in the
Asian session. While it rose against the yen and the franc, it held
steady against the pound and the euro.
The greenback was trading lower at 107.85 against the yen, down
from a 5-day high of 108.07 set at 9:30 pm ET. If the greenback
extends decline, 106.00 is possibly seen as its next support
level.
The greenback depreciated to 0.9804 against the Swiss franc, its
weakest level since July 1. On the downside, 0.96 is possibly seen
as the next support level for the greenback.
Data from the Swiss National Bank showed that Switzerland's
broad money supply grew the most since January 2018.
The broad money supply, M2, expanded 3.7 percent year-on-year in
June, faster than the 3.4 percent increase seen in May. This was
the fastest expansion since January 2018, when M3 climbed 3.9
percent.
The greenback edged down to 1.1225 against the euro, after
rising to 1.1207 at 7:45 am ET. The greenback is seen facing
support around the 1.135 level.
Germany's finance ministry warned that the weakness in the
industrial sector and exports is set to last longer, mainly due to
global risks such as the trade tensions.
"Leading indicators and falling orders indicate a persistently
weakened industrial economy," the ministry said in its latest
monthly report
The greenback eased to 0.6787 against the kiwi and 0.7057
against the aussie, from its early 4-day highs of 0.6757 and
0.7031, respectively. The currency is likely to find support around
0.69 versus the kiwi and 0.72 against the aussie.
On the flip side, the greenback reached as high as 1.3096 versus
the loonie, up from last week's closing value of 1.3059. Next key
resistance for the greenback is likely seen around the 1.33
region.
The greenback held steady against the pound, after having
advanced to a 4-day high of 1.2456 at 7:45 am ET. At Friday's
close, the pair was worth 1.2498.
Survey data from IHS Markit showed that British households'
expectations towards future finances remained positive in July.
The headline household finance index rose for the second
straight month in July, to 44.3 from 43.9 in June. The score
signaled the weakest level of pessimism among households towards
their finances since January.
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