The value of the U.S. dollar saw a notable rebound during Thursday's trading but has pulled back sharply during trading on Friday.

The U.S. dollar index has slumped by 0.81 points or 0.8 percent to 100.70, falling to its lowest levels in over a year.

The buck is trading at 144.35 yen versus the 146.29 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1189 compared to yesterday's $1.1112.

The sharp pullback by the greenback comes as highly anticipated remarks by Federal Reserve Chair Jerome Powell indicated the central bank is prepared to begin lowering interest rates.

"The time has come for policy to adjust," Powell said at the Jackson Hole Economic Symposium, although he noted the "timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks."

Powell's determination that it is time for the Fed to begin cutting rates comes as his "confidence has grown that inflation is on a sustainable path back to 2 percent."

Fed officials have repeatedly said they need "greater confidence" inflation is moving sustainably toward the central bank's 2 percent target before they would consider cutting rates.

Powell said inflation is now much closer to the Fed's objective, with consumer prices rising 2.5 percent year-over-year in July, and noted progress toward 2 percent has resumed after a pause earlier this year.

The remarks by Powell came as recent inflation data has increased confidence the Fed will cut interest rates at its next monetary policy meeting in September.

"Chair Powell just rang the bell to start rate cuts," said MBA SVP and Chief Economist Mike Fratantoni. "He was careful to note that incoming data will inform the pace of cuts, but a cut is coming in September, and this cut will be the first in a series that should bring the federal funds target down significantly over the next 18 months."

According to CME Group's FedWatch Tool, there is a 65.5 percent chance of a quarter point rate cut at the September 17-18 meeting and a 34.5 percent chance of a half point rate cut.

The minutes of the Fed's late July meeting, released on Wednesday, revealed that the "vast majority" of participants believed it would "likely be appropriate" to lower rates at the next meeting if inflation data continued to come in "about as expected."

In U.S. economic news, a report released by the Commerce Department showed a substantial increase by new home sales in the U.S. in the month of July.

The Commerce Department said new home sales spiked by 10.6 percent to an annual rate of 739,000 in July after rising by 0.3 percent to an upwardly revised rate of 668,000 in June.

Economists had expected new home sales to jump by 2.1 percent to an annual rate of 630,000 from the 617,000 originally reported for the previous month.

With the much bigger than expected surge, new home sales reached their highest annual rate since hitting 741,000 in May 2023.

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