Dollar Gains as Fed Chair Jerome Powell Signals More Rate Cuts

The dollar climbed on Monday after Federal Reserve Chair Jerome Powell's hawkish remarks suggested fewer interest rate cuts than previously expected. Powell referenced positive economic data and forecasted two more rate cuts this year. Traders reacted by adjusting their expectations for a 50 basis point reduction in November.

The dollar saw gains on Monday after Federal Reserve Chair Jerome Powell struck a more hawkish note regarding the U.S. economy. His comments led traders to scale back their expectations of another 50 basis point rate cut by the Federal Reserve in its upcoming meeting.

In his speech, Powell pointed to recent improvements in data on economic growth, savings rates, and personal income, which he said had alleviated some of the downside risks the Federal Reserve had been concerned about. He also maintained that there might be two more interest rate cuts of 25 basis points each later this year, assuming the economy continues to perform as projected. Housing services inflation, he warned, may take years to reach desired levels.

Following Powell's remarks, traders now anticipate a 35% chance of a 50 basis point reduction in rates at the November meeting, down from 37% before his speech. Various economic indicators, including the upcoming jobs data, are expected to further influence trading activity and rate forecasts in the coming week.

(With inputs from agencies.)