News Digest:

Two of the major trading currencies remained nervous over the past week, though the dollar did gain some ground after the Fed’s noncommittal reaction to a rate hike. On the other hand, traders were clearly concerned about how France’s fractured election verdict would pan out on the euro’s journey forward.

A report by Reuters quoted analysts to suggest that the recent instances of dollar buying resulted from a lack of clarity over when the US Fed would start cutting lending rates. Fed Chair Jerome Powell hasn’t told us anything we do not know yet, they noted. The dollar index rose to 105.13 but settled lower at 104.80, its lowest since June 13.

Takeaway:

Meanwhile, the euro dipped following France’s hung parliament which could result in a potential political gridlock. However, some analysts held the view that such a situation portends well for fiscal concerns caused by outright wins for far-right or leftist groups. They expect that in this situation the European Central Bank might continue to reduce rates without jeopardizing the current fall in inflation.

End Notes

Source: https://www.reuters.com/markets/currencies/dollar-droops-before-powell-testimony-euro-weathers-france-uncertainty-2024-07-09/