During early Wednesday trading the US Dollar staged a remarkable recovery from a three-month low against other major currencies. This change of direction followed Fed’s chairman Jerome Powell’s speech and press conference on Tuesday, during which he reiterated that the Federal Reserve is independent and will not bow down to political pressure, reaffirming the data dependence governing US monetary policy.
Such a statement reverberated through the markets and appears to have changed the mind set of many investors that had positioned themselves for a 50-basis points interest rate cut in July. The consensus now points to a cut of only 25-basis points and this downgrade in expectations is the main driver behind the current Dollar dynamics.
Photo by Goh Rhy Yan.