The dollar steadied on Monday ahead of a closely watched meeting between United States President Donald Trump and Ukrainian counterpart Volodymyr Zelenskiy, while investors looked to the Federal Reserve’s Jackson Hole symposium later this week for more policy direction.
Moves in major currencies were subdued in the Asian session, though the dollar managed to halt last week’s decline as traders pared back expectations of a large rate cut by the Fed next month. Against a basket of currencies, the dollar was steady at 97.85 after losing 0.4% last week. The euro was little changed at 1.1704 dollars, while sterling edged 0.1% higher to 1.3563 dollars.
Market bets now suggest an 84% chance of a quarter point Fed cut next month, down from 98% a week earlier, following stronger than expected US data. Wholesale prices jumped last month, while July retail sales showed a solid increase, reducing the likelihood of an outsized 50 basis point reduction.
“While the data do not all point in the same direction, the US economy looks to be in okay shape in the third quarter,” said Bill Adams, chief economist at Comerica Bank. “The Fed is likely to cut interest rates by year end, either in September, when markets now price in a cut, or a few months later, when Comerica forecasts a cut.”
The main event for investors on Monday is the Trump Zelenskiy meeting, where European leaders are also expected to join. Washington is pressing Kyiv to accept a quick peace deal to end the war in Europe, the deadliest conflict on the continent in 80 years. Trump, who met Russian President Vladimir Putin in Alaska earlier this month, has emerged more aligned with Moscow in seeking a full peace agreement rather than starting with a ceasefire.
Attention is also fixed on the Kansas City Federal Reserve’s Jackson Hole symposium from August 21 to 23, where Fed Chair Jerome Powell will deliver a speech on the economic outlook and the central bank’s policy framework. “I think Powell will also talk about the current economic conditions in the US, and that will be more policy relevant, that will be more interesting to markets,” said Joseph Capurso, head of international and sustainable economics at Commonwealth Bank of Australia. “Given market pricing is very high for a rate cut in September, I think the risk is that Powell is hawkish, or is perceived to be hawkish, if he gives a balanced view of the US economy.”
The dollar rose 0.14% against the yen to 147.37 after slipping 0.4% last week. Japan’s government brushed aside pointed comments from US Treasury Secretary Scott Bessent, who said the Bank of Japan was “behind the curve” on policy, remarks that were widely seen as pressure to lift interest rates.
The Australian dollar climbed 0.17% to 0.6519 dollars, while the New Zealand dollar gained 0.25% to 0.5940 dollars, both recovering after losses last week.
In digital assets, bitcoin retreated from a record high, last trading 1.7% lower at 115,700.39 dollars. Ether fell 3% to 4,334.81 dollars after hitting its strongest level in nearly four years. “The widespread adoption by institutional investors of crypto ETFs and the recent rally of ETH due to rapid buying by digital asset treasuries is giving a lot of confidence to the crypto and equities markets,” said Leon Yee, chairman of Duane Morris and Selvam. “If you add the Fed rate cut that is bound to happen sometime this year, I think the party will continue.”
