The dollar is under pressure amid expectations of a Fed rate cut

On Thursday, the dollar came under pressure as markets increased their bets on Fed policy easing in September. The reason was statements by the head of the Federal Reserve Bank of New York, John Williams, who admitted the possibility of a rate cut, as well as political pressure from President Donald Trump, who is trying to replace Fed Board member Lisa Cook with a more loyal candidate.

Williams stressed that the decision will depend on new data, including the PCE price index (released on Friday) and the employment report in a week. According to LSEG estimates, the probability of a quarter-point rate cut in September exceeds 89%, and by the end of the year, markets expect an easing of 55 bps. Against this background, the yield on 2-year Treasury securities has fallen to lows since May, increasing pressure on the dollar.

The dollar index fell by 0.12% to 98.07. The euro rose by 0.09% to $1.1648, the dollar against the yen fell by 0.21% to 147.11.

The news from Japan had an additional impact on the currency markets: chief trade negotiator Rei Akazawa canceled a visit to Washington, where it was planned to announce details of investments in the United States worth $ 550 billion under the tariff agreement. Tokyo explained that this requires additional coordination with the American side.