Markets React to Powell Speech and Assassination Attempt on Trump

On Monday, the dollar fell following remarks from Federal Reserve Chair Jerome Powell, while cryptocurrencies surged following an assassination attempt on former President Donald Trump. Investors raised the odds of Trump's reelection, which typically strengthens the dollar. However, dovish signals from Powell led to a brief dip in the greenback.

The dollar fell slightly on Monday following comments from Federal Reserve Chair Jerome Powell. Cryptocurrencies, meanwhile, rose on increased bets that an assassination attempt on former President Donald Trump boosted his reelection chances. Trump, a vocal supporter of cryptocurrencies, hasn't outlined specific crypto policies.

Investors narrowed the odds of a Trump victory following the shooting, with online betting site PredictIt showing election win bets for Trump at 67 cents, up from 60 cents on Friday, and 27 cents for Joe Biden. A Trump win typically strengthens the dollar as part of the 'Trump trade' strategy. However, the dollar dipped from earlier highs, falling sharply as Powell began speaking.

Powell indicated that recent U.S. inflation readings add confidence that price increases are nearing the Fed's target, suggesting possible rate cuts soon. The dollar index fell 0.07% to 104.22 after climbing to 104.31, while Sterling weakened 0.22% to $1.2964. Cryptocurrencies surged, with bitcoin reaching a three-week high.

The Bank of Japan likely intervened in the market to strengthen the Japanese yen, spending up to 3.57 trillion yen ($22.4 billion) after cooler-than-expected U.S. inflation data. 'Movement in Fed futures is going to sway yen a lot,' said Helen Given, FX trader at Monex USA in Washington.