U.S. Dollar Falls Amid Fed Rate Cut Speculation

(RTTNews) - The U.S. dollar weakened against other major currencies in the Asian session on Thursday, after the Fed official left the door open for an interest rate cut next month.

The president of the New York Federal Reserve (Fed), John Williams, left the possibility of a September interest rate reduction open.

Fed Williams confirmed in an interview that he believes every monetary policy meeting is "live" and that rates will eventually decline. These remarks reinforced support for the USD and raised investor views that a cut in September is a realistic possibility.

The traders remain optimistic the U.S. Fed will cut interest rates at their next meeting in September. They also remain cautious ahead of the release of key U.S. economic data later in the week, including second quarter GDP and the Fed's preferred readings on consumer price inflation.

CME Group's FedWatch Tool is currently indicating an 87.2 percent chance the Fed will lower rates by a quarter point at its next monetary policy meeting in September. Many investors believe Trump's interference will lead to lower interest rates in the short-term but push up long-term borrowing costs.

The attacks on the Fed by U.S. President Donald Trump also affected the value of the US dollar. Trump made an attempt to remove Lisa Cook, the governor of the central bank, earlier this week, most likely in an effort to replace her with a dovish policymaker. Its independence as an independent central bank has been called into question by a long string of attacks, of which this is the most recent.

In the Asian trading today, the U.S. dollar fell to 2-day lows of 1.1655 against the euro and 147.00 against the yen, from yesterday's closing quotes of 1.1648 and 147.34, respectively. If the greenback extends its downtrend, it is likely to find support around 1.17 against the euro and 145.00 against the yen.

Against the pound and the Swiss franc, the greenback slipped to 3-day lows of 1.3519 and 0.8010 from Wednesday's closing quotes of 1.3504 and 0.8016, respectively. The greenback may test support near 1.36 against the pound and 0.79 against the franc.

Against Australia, the New Zealand and the Canadian dollars, the greenback dropped to nearly a 2-week low of 0.6523, a 2-day low of 0.5868 and a 2-week low of 1.3770 from yesterday's closing quotes of 0.6513, 0.5861 and 1.3782, respectively. On the downside, 0.66 against the aussie, 0.59 against the kiwi and 1.36 against the loonie are seen as the next support level for the greenback.

Looking ahead, Canada current account data for the second quarter and average weekly earnings data for June, U.S. GDP data for the second quarter, weekly jobless claims data, pending home sales for July and U.S. Kansas Fed composite index for August are slated for release in the New York session.