US Dollar Slides as Markets React to Fed Dovish Comment
The U.S dollar fell against trading partners in the forex market as uncertainties weighed on investors actions amidst the Fed’s dovish comments. Investors liquidated positions in dollar assets, with surging interest in safe havens amidst untamed tariff threats to sentiment.
Investors sold off dollar assets, showing increased interest in safe havens amid ongoing concerns about tariff threats. Across the global markets, investors are reacting to U.S. President Donald Trump’s tariff threat, which some analysts said has become weapon against America’s perceived enemies rather than a policy recalibration.
With investors rotating out of US assets, precious metals are moving higher today due to a weaker dollar. Also, lower T-note yields are bullish for precious metals. Dovish comments from Fed Governor Waller on Thursday evening boosted demand for precious metals as an inflation hedge, as he expressed support for a Fed interest rate cut at the July 29-30 FOMC meeting.
Precious metals also received safe-haven support from global trade tensions, following President Trump’s announcement on Wednesday that he intends to send a tariff letter to more than 150 countries, notifying them that their tariff rates could be 10% or 15%, effective August 1.
The dollar wavers as unchanged producer prices in June relieve some of the hawkish pressure on the Fed fueled by yesterday’s CPI report.
Uncertainty could keep the Fed on hold for longer, in a potential support for the dollar. The dollar strengthens 0.3% against the Swiss franc. It is up 0.1% versus the euro and down 0.1% against the yen.
A quick summary of foreign exchange activity heading into Friday showed that USDEUR rose to 1.1644 from 1.1600 at the Thursday US close and 1.1586 at the same time the previous day.
The Eurozone current account surplus widened in May while Eurozone construction output declined in May, according to data released earlier Friday. The next European Central Bank meeting is scheduled for July 24.
GBPUSD rose to 1.3453 from 1.3420 at the Thursday US close and 1.3399 at the same time Thursday morning. There are no UK data on Friday’s schedule. The next Bank of England meeting is scheduled for Aug. 7.
USDJPY fell to 148.5446 from 148.5777 at the Thursday US close and 148.6257 at the same time Thursday morning. Japanese consumer prices rose only modestly in June, slowing the year-over-year rate, according to data released overnight. The next Bank of Japan meeting is scheduled for July 30-31.
USDCAD falls to 1.3722 from 1.3745 at the Thursday US close and 1.3769 at the same time Thursday morning. There are no Canadian data on Friday’s schedule. The next Bank of Canada meeting is scheduled for July 30.
The dollar index is down by -0.59%. The dollar came under pressure following comments from Fed Governor Christopher Waller on Thursday evening, who stated that he supports a Fed interest rate cut at the July 29-30 FOMC meeting.
On the positive side for the dollar was today’s stronger-than-expected US housing starts and building permits reports. Also, the University of Michigan’s US July consumer sentiment index rose more than expected to a 5-month high, a bullish factor for the dollar. #US Dollar Slides as Markets React to Fed Dovish Comment Naira Rebounds as CBN Injects Dollar into FX Market
