US dollar skids to two-week low under mounting pressures
The US dollar tumbled in European trade on Wednesday against a basket of major rivals, heading for the third daily loss in a row and plumbing two-week trough amid huge selling pressures due to concerns about the US financial stability.
Now investors await remarks by several Fed officials today to gather clues on the future of US interest rates.
The Index
The dollar index fell 0.6% today to 99.40 with a session-high at 99.99.
On Tuesday, the index lost 0.4%, the second loss in a row on US financial stability concerns.
Fiscal Developments
US President Donald Trump has failed to convince Republicans to pass his tax cuts proposal, while investors are growing cautious from potential attempts by US officials to weaken the dollar during a ministerial meeting for the G7 in Canada.
US Rates
US President Donald Trump once again called on the Federal Reserve to cut interest rates in posts on his social media accounts.
Atlanta Fed President Raphael Bostic said earlier this week that he’s leaning towards a single interest rate cut this year.
According to the Fedwatch tool, the odds of a Fed 0.25% interest rate cut in June stood at just 8%.
The odds of a 0.25%% Fed rate cut in July stood at 37%.
Traders now expect 50 basis points overall of Fed rate cuts this year, likely starting in October.
Gold rushes to two-week high as the dollar weakens
Gold prices rose in European trade on Wednesday on track for the third profit in a row, trading once more above $3300 and hitting a week high as the dollar declines against major rivals.
It comes amid concerns about the US financial stability after the US credit rating cut, which increased the challenges facing US policymakers.
The Price
Gold prices rose 0.9% today to $3320 an ounce, a two-week high, with a session-low at $3285.
On Tuesday, gold rose 1.85%, the second profit in a row as the dollar weakened.
US Dollar
The dollar index fell 0.55% on Wednesday on track for the third loss in a row, plumbing a two-week trough at 99.42 against a basket of major rivals.
US President Donald Trump has failed to convince Republicans to pass his tax cuts proposal, while investors are growing cautious from potential attempts by US officials to weaken the dollar during a ministerial meeting for the G7 in Canada.
US Rates
US President Donald Trump once again called on the Federal Reserve to cut interest rates in posts on his social media accounts.
Atlanta Fed President Raphael Bostic said earlier this week that he’s leaning towards a single interest rate cut this year.
According to the Fedwatch tool, the odds of a Fed 0.25% interest rate cut in June stood at just 8%.
The odds of a 0.25%% Fed rate cut in July stood at 37%.
Traders now expect 50 basis points overall of Fed rate cuts this year, likely starting in October.
SPDR
Gold holdings at the SPDR Gold Trust rose 0.57 tons on Tuesday to a total of 921.6 tons.
Sterling reaches three-week peak ahead of UK inflation data
Sterling rose in European trade on Wednesday on track for the third straight profit against the dollar, hitting a three-week high amid a positive sentiment in UK markets after the government reset relations with the EU.
The UK economy grew by the fastest pace in a year during the first quarter, and recent deals with the US and Europe will likely bolster this growth even further in upcoming quarters.
The developments pressure the Bank of England’s policymakers even further and hurt the odds of a UK rate cut in June, with traders now awaiting important UK inflation data for April later today to gather more clues.
The Price
The GBP/USD rose 0.35% today to $1.3436, an April 19 high, with a session-low at $1.3383.
The pound rose 0.25% on Tuesday, the second profit in a row amid heavy selling pressure.
US Dollar
The dollar index fell 0.4% on Wednesday, plumbing two-week lows against a basket of major rivals.
US President Donald Trump has failed to convince Republicans to pass his tax cuts proposal, while investors are growing cautious from potential attempts by US officials to weaken the dollar during a ministerial meeting for the G7 in Canada.
UK Rates
The UK economy grew 0.7% in the first quarter, the best in a year, beating estimates of a 0.6% rise, and up from a 0.1% rise in the last quarter of 2024.
Following the data, the odds of a UK rate cut in June fell from 30% to 25%.
The UK and the EU reached an agreement to reset ties earlier this week following Britain’s raucous exit in 2020.
Otherwise, the last vote by the Bank of England on monetary policies earlier this month showed a clear division on the path ahead for monetary easing.
UK Inflation
Later today, UK inflation data will be released, with consumer prices expected up 3.3% y/y in April, up from a 2.6% rise in March, while core prices are expected up 3.6%.