US dollar holds steady ahead of Federal Reserve Chair Jerome Powell’s comments on interest rates

After continuing with its latest fluctuation, the US dollar remained stable on Tuesday, according to Reuters. This comes after three sessions of gains on Monday with the US dollar index last at 97.34 and ahead of comments on the economic outlook from Federal Reserve chair Jerome Powell.

The news agency said Powell’s remarks could impact interest rate expectations amid mixed signals from the US Federal Reserve.

Talking about the latest development, market analyst Tony Sycamore at IG in Sydney told CNBC, “It’s a slightly hawkish tone from Fed speakers that has given people a little bit of pause for thought.”

Update on Swedish krona

The Swedish krona gained after the Riksbank delivered a 25-basis-point rate cut, according to a senior FX analyst at InTouch Capital Markets, Piotr Matys.

“With the Fed widely expected to lower interest rates over the next 12-18 months and the easing cycle potentially over in Sweden, the path of least resistance could be skewed to the downside in USD/SEK, unless geopolitical tensions escalate markedly,” Reuters quoted Matys as saying.

US Fed rate cut

Earlier this month, the Federal Reserve decided to reduce interest rates for the first time since December. A 25 bps rate cut in its benchmark interest rate to a range of 4–4.25 per cent was announced back then.

Also Read: Is US headed for recession? Here’s what Moody’s chief economist Mark Zandi says

While the Fed pointed out that the future policy moves will depend on economic data, the broader outlook and risk assessments, it also highlighted that growth weakened in the first half of the year and job creation has cooled, despite inflationary pressures remaining elevated.

Among other currencies, the dollar dropped around 4.5% against Argentina's peso, while the Indian rupee weakened to an all-time record low of 88.7975 against the US dollar on Tuesday, as per Reuters.

Also Read: INR vs USD: Rupee hits all-time low of 88.46 against US dollar

FAQs

When will Federal Reserve Chair Jerome Powell deliver his speech?

Jerome Powell will talk about the US economy on Tuesday, September 23.

What was the US Fed rate cut earlier this month?

A 25 bps rate cut in its benchmark interest rate to a range of 4–4.25 per cent was announced earlier this month.

How much did the US dollar drop against Argentina's peso?

The dollar dropped around 4.5% against Argentina's peso.