Dollar drifts as Powell comments bring September rate cut in focus

Rate Cuts:  dollar hung around five-week lows on Tuesday as comments from Federal Reserve Chair Jerome Powell bolstered case for a rate cut in September, while cryptocurrenices gained on rising odds of former President Donald Trump getting reelected.

Powell said on Monday three U.S. inflation reings over second quarter of this year "d somewhat to confidence" that pace of price increases is returning to Fed's target sustainably.

"We've h three better reings, and if you average m, that's a pretty good place," Powell said at an event at Economic Club of Washington.

comments, likely Powell's last until his press conference following Fed's July 30-31 meeting, shifted rate cut expectations. Markets are now anticipating 68 basis points of easing this year, with a rate cut in September fully priced in, CME FedWatch tool showed.

euro was a she lower at $1.0893, while sterling last fetched $1.2967. dollar index, which measures U.S. unit versus six peers, was at 104.3, not far from one month low of 104 it touched on Monday. "Despite dovish inclinations, Powell remained in a data-dependent mode which is warranted after Fed has burnt its fingers with inflation running back higher in Q1 after a dovish pivot at end of 2023," said Charu Chanana, he of currency strategy at Saxo.

"Markets may need to wait longer for confirmation of ir September rate cut hopes, and growth and labour data will be on rar such as retail sales today."

U.S. retail sales for June due later in day are expected to show a decline of 0.3 per cent on a month-on-month basis.

Meanwhile, yen was weaker in early tring after touching a one-month high against dollar at 157.165 per dollar on Monday. It was last at 158.54, with trers wary of furr intervention from Japanese authorities.

Trers suspect Tokyo intervened in market in anor effort to lift Japanese currency last week after cooler-than-expected U.S. inflation report. Data from Bank of Japan indicates that authorities may have spent up to 3.57 trillion yen to prop up frail yen.

Markets will be eyeing fresh money markets data to gauge if Tokyo intervened on Friday as well.

In cryptocurrencies, bitcoin rose 1 per cent to tre just shy of $65,000 mark, near its highest in a month. Er was 1 per cent higher at $3,466 at a two-week peak.

Cryptocurrencies, along with shares of companies that could benefit from a Donald Trump presidency, jumped on Monday after an assassination attempt on Republican candidate boosted expectations he would win November election.

Trump presented himself as a champion for cryptocurrency during a San Francisco fundraiser in June, although he has not offered specifics on his proposed crypto policy.

"While crypto scene still has SEC Chair Gary Gensler as a consideration on regulatory side, potentially having leer of free world in your corner will always sit well with crypto hes," said Chris Weston, he of research at Pepperstone.

In or currencies, Australian dollar was 0.16 per cent lower at $0.6749, creeping away from six-month high it touched last week. New Zealand dollar eased 0.17 per cent to $0.6064, hitting a two-week low.

(Reporting by Ankur Banerjee in Singapore; Editing by Christopher Cushing)