The U.S. dollar gave up its morning gains today. It was weakened by comments from Federal Reserve Chair Kevin Warsh, who said that inflation expectations and inflation risks had eased in recent weeks.
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Dollar Reacts to Rate and Inflation Outlook
The dollar index, which measures the value of the U.S. dollar against a basket of six major global currencies, was up 0.1% at 101.30 points around 18:45 CEST.
The dollar has been strengthening on growing expectations that the Fed will raise its key interest rate this year. Inflation in the United States remains well above the central bank’s 2% target. However, many analysts believe inflation will ease in the coming months.
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Markets Watch U.S. Data as the Yen and Euro Remain Under Pressure
Markets are now focused on Thursday’s report on the U.S. labor market for June. Job growth over the past three months has exceeded expectations and supported the outlook for U.S. economic growth. The dollar is also weakening against the Japanese yen, slipping 0.1% to 162.38 JPY. The Japanese currency had previously suffered the most from the dollar’s strength, putting Japan’s Ministry of Finance in a position where it may need to decide whether to intervene in support of the yen. The exchange rate against the dollar was the weakest in 40 years.
At the same time, the euro was down 0.3% against the dollar at 1.1388 USD. According to Eurostat’s preliminary report, inflation in the eurozone fell more than expected in June and dropped below 3%. This eased pressure on the European Central Bank to raise interest rates.
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Source: ČTK
