US Dollar tumbles on Fed’s Williams comments; DXY down 0.40%

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  • Greenback tumbles after Fed’s Williams says it better to cut preventative that wait for disaster. 
  • US Dollar Index (DXY) erases weekly gains, drops back below 97.00.

The greenback tumbled across the board, even against Emerging market currencies following comments from Fed’s Williams supporting a rate cut strongly. According to him, it is better to take preventative measures on interest rates than to wait for disaster to unfold. He added there might structural factors causing a decline in inflation expectations. 

Equity prices in Wall Street surged with main indexes erasing losses; while US bonds rose. The 10-year yield dropped back to 2.04%, approaching weekly lows. The DXY fell below 97.00 and bottomed at 96.82, the lowest since Monday. The index is back at the same level it had at the beginning of the week, after falling 0.65% from yesterday’s highs. 

At the same time, EUR/USD surged to 1.1270 after trading earlier today near 1.1200; GBP/USD climbed to 1.2530 and USD/JPY fell to 107.44, a 3-week low. Most emerging market currencies hit new daily highs versus the US Dollar. 

William’s considerations helped anchor Fed rate cut expectations. The next FOMC meeting will take place on July 30/31 and market pricing points to a rate cut. Data from the US today came in positive, with the Philly Fed above expectations, but it did not offer support to the greenback. 

 

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