The US dollar declined after two weeks of gains as traders shifted focus to trade risks and the Federal Reserve's upcoming decisions. Treasury Secretary Scott Bessent expressed concerns about central bank independence amid political pressures affecting credibility. Commerce Secretary Howard Lutnick confirmed that a hard deadline for new tariffs on August 1 adds uncertainty to the trade outlook. Additionally, Fed Governor Christopher Waller supported possible interest rate cuts at the July meeting, indicating a proactive approach. Anticipation builds for Fed Chair Jerome Powell's next speech impacting currency and yield dynamics.
Recent reports suggested that Treasury Secretary Scott Bessent attempted to dissuade President Trump from firing Chair Jerome Powell. Concerns around central bank independence could continue to weigh on the currency, while the current political pressure could undermine the institution's credibility.
Commerce Secretary Howard Lutnick reiterated that August 1 remains a hard deadline for new tariffs, adding to the concerns over the trade outlook.
Fed Governor Christopher Waller said the central bank should not wait for further deterioration in the labour market before cutting rates, supporting a move as early as the July meeting.
Looking ahead, all eyes are now on tomorrow's Fed Chair Jerome Powell speech. While dovish remarks could weigh on the currency and yields, a more cautious tone could provide temporary support.
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