Markets
Dollar falls after Powell, cryptocurrencies rise as investors eye Trump victory
NEW YORK, July 15 (Reuters) – The dollar fell slightly on Monday after comments from Federal Reserve Chairman Jerome Powell, while cryptocurrencies rose on bets that a attempted murder on former President Donald Trump raised his possibility of re-election.Trump has he intruduced himself as a staunch supporter of cryptocurrencies, although he did not provide specific details on his cryptographic policy proposal.Following the shooting, investors has reduced the odds of a Trump victory. Online betting site PredictIt, opens a new tab showed that bets on Trump’s election victory were at 67 cents, up from 60 cents on Friday, with Joe Biden at 27 cents.
The dollar tends to strengthen in what is known as the “Trump trade,” a set of assets that are likely to perform well under a Trump presidency characterized by aggressive trade policy and looser regulation for some sectors.
But the initial reaction proved short-lived, with the greenback falling from previous highs.
The dollar also fell sharply as Powell began his speech. He said The three second-quarter U.S. inflation readings “somewhat boost confidence” that the pace of price increases is returning to the Fed’s target on a sustainable basis, indicating a move to cut interest rates may be imminent.
“The market feels confident and it felt confident even before (Powell) talked about a rate cut in September, so I don’t think he’s really put it on the table, but it’s clear that he is,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.
“Powell could have argued more forcefully that we have had a soft landing and now we are avoiding a hard landing. That is the kind of logic that is being developed now.”
The dollar index, which measures the greenback against a basket of currencies, fell 0.07% to 104.22 after rising as high as 104.31, with the euro down 0.09% to $1.0897. The pound weakened 0.22% to $1.2964.
According to the CME, markets are fully pricing in a rate cut of at least 25 basis points (bps) by the Fed in September. FedWatch Tool, opens a new tabafter last week’s data showed consumer prices fell on a monthly basis for the first time in four years in June.
Cryptocurrency prices jumped, with bitcoin rising more than 6% to $63,808 after hitting a three-week high of $63,838.86. Ether rose more than 7% to $3,417.20.
Against the Japanese yen, the dollar was unchanged at 157.89. The greenback fell to 157.15 as Powell spoke, its lowest since June 17, before quickly rebounding.
The Bank of Japan (BoJ) is believed to have intervened on the market in another attempt to support the Japanese currency last week after a colder-than-expected spell US Inflation ReportCentral bank data suggests that the authorities may have spent as much as 3.57 trillion yen ($22.4 billion) to do so on Thursday.
“Anything that gives the Bank of Japan hope that the Fed will cut rates more or sooner than previously expected will boost the yen,” said Helen Given, an FX trader at Monex USA in Washington. “It’s all about interest rate differentials, so the move in Fed futures will be very much a factor in the yen.”
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Reporting by Chuck Mikolajczak, additional reporting by Gertrude Chavez-Dreyfuss; editing by Sharon Singleton and Richard Chang
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