Dollar hits two-week low as investors anticipate Fed rate cut
The U.S. dollar slipped to a two-week low on Wednesday after muted U.S. inflation data strengthened expectations that the Federal Reserve will cut interest rates next month. Investor confidence in the dollar was further shaken by President Donald Trump’s attempts to challenge Fed independence.
The dollar index, which measures the currency against a basket of peers, fell to 97.76, its lowest since July 28, extending a 0.5% decline from Tuesday. U.S. consumer prices rose only marginally in July, in line with forecasts, signaling limited impact from tariffs on goods prices. Market data from LSEG showed traders now price in a 98% probability of a Fed rate cut in September, News.Az reports, citing Reuters.
“U.S. CPI release turned out to be a dollar-negative event,” said Francesco Pesole, strategist at ING. “The September Fed cut remains firmly priced in.”
Investor concerns were compounded by Trump’s remarks about potentially suing Fed Chair Jerome Powell over renovation management at the central bank headquarters, as well as criticism of Goldman Sachs CEO David Solomon for economic forecasts.
The dollar’s weakness boosted other major currencies. The euro gained 0.3% to $1.1709, the British pound rose 0.4% to $1.3562, and the Australian dollar strengthened 0.35% to $0.6552. The New Zealand dollar also climbed 0.5% to $0.5986 following an expected interest rate cut by the Reserve Bank of Australia.
In the cryptocurrency market, bitcoin eased 0.34% to $119,809, while ether reached a nearly four-year high at $4,679. Gracie Lin, CEO of crypto exchange OKX in Singapore, noted that ether’s growth is fueled by “real-world adoption and capital confidence,” with ETH now the most traded asset on the platform over the past month.
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