Dollar Slides Below 99 as Yen Surges and Fed Rate Hike Chances Diminish
The US Dollar Index (DXY) has seen its value decline to below 99.00, hitting a new low in over a week. The DXY trades around 98.90 at the time of writing, down 0.67% on the day. This drop is largely attributed to a sharp rally in the Japanese Yen (JPY), with USD/JPY falling for the second consecutive day by around 2%. The Yen's surge has sparked speculation about possible intervention and rate checks from the Japanese authorities.
Additionally, a modest pullback in US Treasury yields has weighed on the US Dollar. Yields have retreated across the curve from recent highs, with the benchmark 10-year yield trading at around 4.75% after touching 4.81% on Wednesday, its highest level since October 2023.
The selling pressure on the Greenback intensified following less-hawkish comments from Federal Reserve Governor Christopher Waller. He stated that he is 'finally seeing some signs of disinflation,' adding: 'Give disinflation a chance; we can wait one meeting.' However, he warned that if the trend reverses in August, he would be 'willing to pull the trigger on a rate hike.'
The probability of a rate hike at the September 15-16 meeting has fallen to around 50% from 63% a day earlier, according to the CME FedWatch Tool.