The US dollar steadied in early European trading on Monday, giving up some of the gains it made after the assassination attempt on former US President Donald Trump over the weekend, ahead of comments from Federal Reserve Chairman Jerome Powell.
At 05:45 ET (09:45 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was largely unchanged at 103.785, after hitting a one-month low last week.
Dollar steady ahead of Powell speech
The dollar and the benchmark index initially rose after Trump’s right ear was shot, causing his face to bleed, following a shooting at a campaign rally in Pennsylvania over the weekend.
Trump is now scheduled to appear at the 2024 Republican Party convention later this week, and is likely to be nominated as the party’s front-runner in the presidential race.
Analysts said the shooting increased his chances of defeating Joe Biden — a scenario that could ultimately benefit the dollar, given that Trump has signaled his intention to enact more protectionist trade policies.
But those gains were pared ahead of comments from Federal Reserve Chairman Jerome Powell, who is scheduled to be interviewed by David Rubenstein at the Economic Club of Washington, D.C.
U.S. inflation showed signs of easing last week, and Powell may boost expectations that the central bank will begin its rate-cutting cycle in September.
“Fed spokespeople will have to comment on the latest CPI numbers, and when compared to the June dot plot, there is a clear risk of dovish adjustments in the communications of several FOMC members,” analysts at ING Bank said in a note.
Euro rises ahead of ECB meeting
The euro rose 0.1% against the US dollar to 1.0910, with the euro trading at its highest level since March, ahead of the European Central Bank’s latest policy-setting meeting later this week.
The European Central Bank is widely expected to maintain interest rates after easing them in June.
“The weaker dollar narrative has boosted EUR/USD in July – but we still believe the volatile situation in French politics poses a risk that cannot be ignored, and at the very least suggests the euro is lagging behind most other pro-cyclical currencies in any fresh USD sell-off,” ING said.
Credit rating agencies Moody’s and Standard & Poor’s Global have warned of the negative impact on the French economy due to political deadlock, as no political party achieved an outright majority in the recent parliamentary elections.
Sterling fell slightly to 1.2988, trading around its highest level in more than two years, following the landslide election victory for Britain’s centre-left Labour government, as investors began to view UK markets as a potential haven as political uncertainty mounts in the US and elsewhere in Europe.
Yuan falls after weak Chinese GDP data
In Asia, the US dollar rose 0.1% to 157.96, with the yen retreating slightly after rising sharply against the dollar late last week, sparking speculation about whether the move was due to government intervention or a short squeeze on bets against the yen.
Sterling rose 0.2% to 7.2627, with the Chinese currency weakening to near eight-month lows after China’s economy grew less than expected at 4.7% in the second quarter, amid growing headwinds from weak consumer spending.