Dollar Soars to New Highs as Robust Data Pushes Fed Rate Cuts Further Out
The greenback's relentless rally continues—strong economic numbers just handed the Fed another excuse to keep rates higher for longer.
No pivot party for you
Markets priced in six rate cuts this year. Now they're getting reality-checked by payrolls, CPI, and that old villain: math. The dollar index (DXY) hit a 2025 high as traders finally admit the Fed might actually mean its 'data-dependent' mantra.
Funny how 'transitory' inflation works—it always transitions into someone else's problem.
Markets reacted to Trump firing Powell rumor
Concerns about the U.S. budget have shaken investors. Lawmakers’ large spending and tax plans have raised doubts about fiscal stability. At the same time, President TRUMP has repeatedly scolded Fed Chair Powell for not cutting rates faster.
Analysts at the Commonwealth Bank of Australia warned that the dollar “remains vulnerable to the downside if concerns about U.S. policymaking further undermine investor confidence in USD assets.”
They pointed to this week’s sudden dip, triggered by rumors that Trump planned to fire Powell, as proof of that risk.
Bitcoin hovered just below $120,000 after briefly hitting $123,153.22, and the market got a boost when Congress passed rules for dollar‑pegged stablecoins.
Dollar strong against yen while euro and pound made modest moves
Meanwhile Japan’s yen weakened as Sunday’s upper‑house elections approached, with polls showing the ruling party could lose its majority. A change in power could make monetary policy less predictable. It can slow down tariff talks with Washington.
On foreign exchange markets, the dollar was trading around ¥148.60, not far from Wednesday’s three‑and‑a‑half‑month peak of ¥149.19.
Japan’s lead trade envoy, Ryosei Akazawa, held talks on Thursday with Commerce Secretary Gina Raimondo in an eleventh‑hour bid to block a 25% tariff scheduled to apply once August 1 has passed.
Elsewhere, the euro climbed 0.25% to $1.1626, bouncing back from its Thursday trough NEAR $1.1556, though it still finished the week 0.59% lower.
The British pound rose about 0.13% to $1.344, cutting its weekly loss to 0.41%.
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