Forex-dollar steadies as September Fed cut bets ramp up

TOKYO/LONDON: The dollar held steady on Thursday as markets priced in growing odds of a Federal Reserve rate cut next month, after New York Fed President John Williams said policymakers could move if economic data support easing.
Williams told CNBC the September 16–17 meeting remained “live,” with inflation and labour data due in coming weeks likely to guide the decision. Markets now see an 89% chance of a quarter-point cut and expect a total of 55 basis points of easing by year-end, according to LSEG data.
The US currency has also come under political pressure from President Donald Trump’s drive to assert greater control over monetary policy. Trump is seeking to remove Fed Governor Lisa Cook and replace her with a loyalist, a move analysts said could trigger a protracted legal fight.
“Short-dated US yields remain near their recent lows, and most would conclude that this week’s attempt to remove the Fed’s Lisa Cook by President Trump is dollar-negative,” said Chris Turner, global head of markets at ING.
Two-year Treasury yields, which are sensitive to policy expectations, slid to their lowest since May 1, adding to pressure on the dollar.
The dollar index, which tracks the currency against six peers, edged 0.1% higher to 98.225 after two days of losses. The euro was steady at $1.1630, showing resilience even as French Prime Minister Gabriel Attal unexpectedly called a confidence vote next month that could topple his minority government.
Against the yen, the dollar eased 0.03% to 147.34. The US currency also slipped to its weakest level since November against the offshore Chinese yuan, last down 0.2% at 7.1360.
In Asia, Japan’s chief trade negotiator Ryosei Akazawa cancelled a planned trip to Washington at the last minute, delaying an announcement of Tokyo’s $550 billion investment pledge in the United States linked to a tariff deal. A government spokesperson said more talks were needed “at the administrative level.” — Reuters