U.S. Dollar Index Slumps To Lowest Levels In Over A Year
August 23 2024 - 11:41AM
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The value of the U.S. dollar saw a notable rebound during
Thursday's trading but has pulled back sharply during trading on
Friday.
The U.S. dollar index has slumped by 0.81 points or 0.8 percent
to 100.70, falling to its lowest levels in over a year.
The buck is trading at 144.35 yen versus the 146.29 yen it
fetched at the close of New York trading on Thursday. Against the
euro, the dollar is valued at $1.1189 compared to yesterday's
$1.1112.
The sharp pullback by the greenback comes as highly anticipated
remarks by Federal Reserve Chair Jerome Powell indicated the
central bank is prepared to begin lowering interest rates.
"The time has come for policy to adjust," Powell said at the
Jackson Hole Economic Symposium, although he noted the "timing and
pace of rate cuts will depend on incoming data, the evolving
outlook, and the balance of risks."
Powell's determination that it is time for the Fed to begin
cutting rates comes as his "confidence has grown that inflation is
on a sustainable path back to 2 percent."
Fed officials have repeatedly said they need "greater
confidence" inflation is moving sustainably toward the central
bank's 2 percent target before they would consider cutting
rates.
Powell said inflation is now much closer to the Fed's objective,
with consumer prices rising 2.5 percent year-over-year in July, and
noted progress toward 2 percent has resumed after a pause earlier
this year.
The remarks by Powell came as recent inflation data has
increased confidence the Fed will cut interest rates at its next
monetary policy meeting in September.
"Chair Powell just rang the bell to start rate cuts," said MBA
SVP and Chief Economist Mike Fratantoni. "He was careful to note
that incoming data will inform the pace of cuts, but a cut is
coming in September, and this cut will be the first in a series
that should bring the federal funds target down significantly over
the next 18 months."
According to CME Group's FedWatch Tool, there is a 65.5 percent
chance of a quarter point rate cut at the September 17-18 meeting
and a 34.5 percent chance of a half point rate cut.
The minutes of the Fed's late July meeting, released on
Wednesday, revealed that the "vast majority" of participants
believed it would "likely be appropriate" to lower rates at the
next meeting if inflation data continued to come in "about as
expected."
In U.S. economic news, a report released by the Commerce
Department showed a substantial increase by new home sales in the
U.S. in the month of July.
The Commerce Department said new home sales spiked by 10.6
percent to an annual rate of 739,000 in July after rising by 0.3
percent to an upwardly revised rate of 668,000 in June.
Economists had expected new home sales to jump by 2.1 percent to
an annual rate of 630,000 from the 617,000 originally reported for
the previous month.
With the much bigger than expected surge, new home sales reached
their highest annual rate since hitting 741,000 in May 2023.
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