Dollar Stabilizes After Williams Inflames Rate Hopes By Investing.com

  


© Reuters.

Investing.com — The U.S. dollar was consolidating at lower levels Friday morning in Europe and was on track to end the week roughly where it started, after a speech from New York Federal Reserve President revived hopes of a large interest rate cut at the Fed’s next policy meeting.

“It’s better to take preventative measures than to wait for disaster to unfold,” Williams (NYSE:) told a central banking conference. “When you only have so much stimulus at your disposal, it pays to act quickly to lower rates at the first sign of economic distress.”

The comment revived hopes that the Fed will cut its Fed funds rate by 50 basis points – rather than the more modest 25 basis point consensus view – at the Federal Open Market Committee meeting on July 30-31. Speeches later by the Fed’s and will give further clues as to whether Williams’s is the majority view.

The comments knocked the , which tracks the greenback against a basket of developed-market currencies, down by around half a percent late on Thursday, but it recovered overnight to trade at 96.537 by 3:05 AM ET (0705 GMT).

The prospect of easier U.S. monetary policy has given emerging market central banks more confidence to cut their own interest rates without undermining their currencies. Indonesia, South Korea and South Africa all cut their key rates by 25 basis points on Thursday, but the hit a new 15-month high against the dollar, while the hit a seven-month high.

In Europe, the and also both profited from Williams’ comments, the British pound rising above $1.25 again after touching a two-year low below $1.24 earlier this week. The euro rose as high as $1.1282, before retreating to $1.1263, with lower-than-expected German in June reminding traders of action from the European Central Bank at its governing council meeting next week.

Bloomberg reported on Thursday that the ECB had begun a review of how it defines its inflation target, something that could ultimately lead to its monetary policy staying looser for longer.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Source link