The dollar strengthened after Federal Reserve Chair Jerome Powell hinted at a cautious approach to interest rate cuts. The New Zealand dollar also rose ahead of the central bank’s rate decision. Powell mentioned that a rate cut would only happen once the Fed is more confident about inflation reaching its target.
The dollar index, which measures the U.S. currency against major peers, remained steady after a slight increase. Traders are predicting a rate cut by September, with a second cut likely by December. Powell’s upcoming testimony to the House and CPI data for June will be closely watched.
In other currency news, the euro and Australian dollar held steady, while the New Zealand dollar saw a slight increase. The Reserve Bank of New Zealand is expected to keep rates unchanged as it assesses inflation levels. There is speculation that an inflation slowdown could prompt a rate cut in October.
Overall, the currency markets are reacting to Powell’s comments and upcoming economic data releases. The situation remains fluid, with traders monitoring developments closely.