Dollar weakens as Fed cut bets stay firm, Trump–Putin summit ends with no deal
&imwidth=600&imheight=450&format=webp&quality=medium "Dollar weakens as Fed cut bets stay firm, Trump–Putin summit ends with no deal")
US One dollar banknotes are seen in front of displayed stock graph in this illustration. Photograph: (Reuters)
The US dollar declined 0.4% over the week as markets expect a September rate cut from the Federal Reserve despite surprise producer price increases.
The US dollar slipped on Friday, rounding off a volatile week that kept traders focused on the Federal Reserve’s next move. According to Reuters, markets are betting firmly on a September rate cut, while global attention briefly shifted to Alaska where President Donald Trump and his Russian counterpart Vladimir Putin held closely watched talks over Ukraine. The dollar index fell 0.4 per cent over the week, giving up most of its gains from Thursday after data showed US producer prices rose more than expected in July. Despite that surprise, money markets still see a 93 per cent chance of a quarter-point rate cut in September, as tracked by the CME FedWatch tool.
Economists polled by Reuters expect this to be the first cut of the year, with another likely before December, as concerns grow over sluggish growth and the inflationary drag from tariffs. Chicago Fed President Austan Goolsbee acknowledged that services inflation was a source of “unease,” highlighting the stagflationary risk for the economy.
Data mix keeps Fed in spotlight
Fresh retail sales figures showed US consumer demand remains solid, rising 0.5 per cent in July, driven by strong auto purchases and aggressive promotions by Amazon and Walmart. Import prices also picked up, led by costlier consumer goods. Investors now look to next week’s Jackson Hole symposium for guidance on the Fed’s easing trajectory.
Brian Jacobsen, chief economist at Annex Wealth Management, told Reuters that while some officials favour quicker cuts, Fed Chair Jerome Powell may attempt to cool expectations on timing and scale.
Trump–Putin talks fall short
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The Alaska summit between Trump and Putin drew global attention but delivered little substance. Both leaders described the meeting as “productive,” yet, as per Reuters, there was no agreement on a ceasefire in Ukraine. Analysts said the lack of new sanctions offered minor relief for investors, but the talks were largely symbolic.
Shaniel Ramjee of Pictet Asset Management noted that without Ukrainian and European involvement, a durable settlement remains unlikely. Markets, he added, have “learnt not to expect too much” from these negotiations.
Currency moves and crypto steadies
The euro gained 0.5 per cent to $1.1702, sterling rose 0.2 per cent to $1.3552, and the dollar slipped 0.4 per cent to 147.23 yen, supported by stronger-than-expected Japanese growth data. Bitcoin held steady at $117,126, a day after notching a record high amid optimism over looser Fed policy and a friendlier regulatory stance in Washington.
(With inputs from the agencies)