The US Dollar declined yesterday after Federal Reserve Chair Jerome Powell adopted a moderately dovish tone in his comments, indicating that the U.S. central bank is likely to begin its easing cycle later this year.
Speaking at a monetary policy conference in Portugal, Powell stated that the U.S. economy has made significant progress on inflation, returning to a disinflationary path. Analysts interpreted his remarks as dovish.
Comments from the Fed officials overshadowed data showing an increase in U.S. job openings in May, following substantial declines in the previous two months. According to the Job Openings and Labor Turnover Survey (JOLTS), job openings, an indicator of labor demand, rose by 221,000 to 8.140 million at the end of May.
In the aftermath of the JOLTS report and Powell's comments, U.S. rate futures now indicate a 69% chance of a rate cut in September, up from about 63% on Monday. The market has also priced in one to two rate cuts for 2024.
In afternoon trading, the dollar index was down 0.1% at 105.71. USD/GBP saw a drop of 0.56%, while dropping 0.41% against the Euro.