Dollar Steadies on Powell's Comments Ahead of Second Testimony
GBP
GBP/USD has advanced and is currently trading at 1.2793 (interbank). GBP/EUR stands at 1.1822 (interbank).
The absence of new UK economic data has left the Pound exposed to post-election momentum, following the Labour Party’s decisive victory last Friday.
A favourable market response to Labour’s win has supported Sterling, as both investors and economists are hopeful that British political stability will aid in reinstating the UK’s status as a safe-haven for political and economic matters. As the new UK Chancellor, Rachel Reeves emphasised Labour’s commitment to addressing the core issues of the UK’s economic framework to boost domestic growth.
Today, speeches from MPC members Huw Pill and Catherine Mann are anticipated to shed light on the country's economic outlook and possible policy shifts, potentially triggering market fluctuations.
Today’s Events (GMT):
14:30 - BoE MPC Member Pill Speaks
16:30 - BoE MPC Member Mann
EUR
EUR/USD is now trading at 1.0821 (interbank), down 0.11% after peaking at 1.0845 yesterday, the highest level since June 12.
Yesterday, governing council member Fabio Panetta stated that “the ECB can continue to gradually reduce interest rates without jeopardizing the ongoing decline in inflation.”
The ECB reduced rates in June for the first time from record highs, but has not committed to further cuts.
Additionally, French political tensions have escalated following the snap election, resulting in a deeply divided parliament. Former Prime Minister Edouard Philippe has called for center and center-right parties to unite and form a new government.
Eurozone data is sparse today, with investors primarily focusing on the German Harmonized Index of Consumer Prices (HICP) inflation data due tomorrow.
No significant events are scheduled for today
USD
The Dollar Index, which measures the U.S. dollar against a basket of major currencies, remained relatively stable at 105.09 after a slight 0.1% rise on Tuesday. On Monday, the index hit its lowest point since June 13 following unexpectedly weak U.S. payroll data.
领英推荐
The dollar is marginally higher today but still near three-week lows, as Federal Reserve Chair Jerome Powell's cautious remarks tempered risk sentiment.
During his initial testimony to Congress, Powell indicated that a rate cut is unlikely until the Fed is "more confident" that inflation is moving towards the 2% target, highlighting the importance of Thursday's CPI report for June. Powell also acknowledged the cooling job market, stating, "We now face two-sided risks" and can't solely focus on inflation.
Traders now see about a 73% chance of a rate cut by September, down from 76% the previous day, according to the CME FedWatch tool, with a second cut likely by December.
Powell’s second testimony this afternoon will be closely watched.
Today’s Events (GMT):
15:00 - Fed Chair Powell Testifies
19:30 - FOMC Member Bowman Speaks
CAD
USD/CAD is currently trading at 1.3633 (interbank).
Canada’s unemployment rate is on track to reach or exceed 7% this year, prompting the Bank of Canada (BoC) to consider rate cuts sooner rather than later.
The unemployment rate has been climbing since hitting a post-pandemic low of under 5% in 2022, outpacing many comparable countries.
In June, the Bank of Canada cut interest rates for the first time in over four years, lowering its benchmark rate to 4.75%. The next rate announcement is scheduled for July 24, with market opinion split on the likelihood of another cut.
Additionally, Brent crude is currently at $84.84 per barrel, while U.S. West Texas Intermediate (WTI) crude is at $80.76 per barrel.
No significant events are scheduled for today
?
For further analysis or to book a transaction, please get in touch: