Dollar Hits Seven-Month Low Amid Anticipation of Fed Rate Cuts

The dollar fell to a seven-month low as traders anticipate comments from Federal Reserve Chair Jerome Powell regarding potential interest rate cuts in September. The Japanese yen reached a one-week high, with markets closely watching Powell’s speech at Jackson Hole. The debate centers on whether the Fed will cut rates by 25 or 50 basis points.

The dollar plunged to a seven-month low, while the Japanese yen soared to its highest in over a week as traders eagerly await Federal Reserve Chair Jerome Powell's forthcoming remarks. Powell's speech at the Jackson Hole symposium is expected to provide clues on whether the U.S. central bank will initiate interest rate cuts as soon as September.

Much of the market's focus is on whether Powell signals a reduction of 25 or 50 basis points. Market participants previously anticipated more aggressive cuts, but recent data showing higher-than-expected shelter inflation and robust retail sales for July have tempered those expectations.

Minneapolis Fed President Neel Kashkari, San Francisco Fed President Mary Daly, and Chicago Fed President Austan Goolsbee have all suggested that the Fed should consider adjusting borrowing costs amid signs of a weakening labor market. As the dollar continues its decline, global currencies like the euro and yen are making gains, reflecting shifting rate expectations and economic sentiment.

(With inputs from agencies.)