FX.co ★ DXY Tumbles after Powell Speech

The dollar index declined by over 0.7%, dipping below 98 on Friday, following remarks by Fed Chair Jerome Powell at the Jackson Hole symposium, where he indicated potential rate cuts. Powell pointed out that although unemployment is currently low, increasing risks to the labor market exist, and the existing monetary policy stance remains "restrictive," suggesting adjustments might be necessary. He also emphasized that changes in tax, trade, and immigration policies are reshaping economic expectations. Reacting promptly, markets have begun factoring in a 91% probability of a quarter-point rate cut in September, which spurred increases in stocks and bonds. Despite this activity, the dollar remains nearly unchanged for the week after experiencing declines over the previous two periods.