Market Update: Dollar and Cryptocurrencies
TOKYO – The US dollar lingered near three-week highs as traders anticipated the release of inflation data later in the day, which could offer insights into future monetary policy. The US currency also found support from rising Treasury yields amidst President Trump’s ongoing criticisms of the Federal Reserve’s chairman. There’s a notable focus on whether Jerome Powell might step back from his role at the Fed.
The Australian dollar has dipped from its recent eight-month peak last week, just before a report on China’s gross domestic product, given that China is Australia’s primary trading partner.
This week, Bitcoin was trading around $120,067 after reaching a record high of $123,153.22 on Monday, fueled by investor optimism regarding potential legislative successes in the cryptocurrency sector.
Early in the Asian trading session, the dollar held steady at 147.75 yen, slightly lower than Monday’s peak of 147.78, which had not been seen since June 23rd.
The dollar index, which measures the currency against six major rivals, was at 98.104, just below its overnight high of 98.136, marking the highest level since June 25th.
The euro remained stable at $1.1662, having previously dipped to $1.1650 on Monday, the lowest point since late June.
Jerome Powell has indicated that inflation is likely to increase this summer due to tariffs. Economists surveyed by Reuters project that annual inflation will climb to 2.7%, up from 2.4% the previous month. Core inflation is also expected to rise, from 2.8% to 3.0%.
There’s some speculation about the Federal Reserve’s strategy. If inflation doesn’t pick up as anticipated, it might raise questions about the decision not to lower interest rates. Some even suggest that calls for changes in leadership at the Fed might grow from the White House.
On Monday, Trump reaffirmed his stance against Powell, insisting interest rates should be below 1%, rather than within the 4.25% to 4.50% range. Meanwhile, Fed fund futures traders are anticipating a 50 basis point rate cut by year-end, with the first reduction expected in September.
In other news, China’s economy is showing signs of cooling in the second quarter following a strong start to the year, influenced by trade tensions and ongoing property market troubles. This scenario puts pressure on Chinese policymakers to consider additional stimulus measures. Data expected later today suggests a year-on-year increase of 5.1% between April and June, down from 5.4% in the first quarter, according to a Reuters poll.
