Finance
Dollar gains against peers after Powell's cautious rate outlook
Published by Global Banking & Finance Review®
Posted on September 24, 2025
4 min readLast updated: January 21, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on September 24, 2025
4 min readLast updated: January 21, 2026
The US dollar strengthened against major currencies after Jerome Powell's cautious remarks on interest rates, impacting global markets.
By Chibuike Oguh and Canan Sevgili
NEW YORK/LONDON (Reuters) -The U.S. dollar gained against peers including the yen, Swiss franc and euro on Wednesday, after Federal Reserve Chair Jerome Powell struck a cautious tone on further easing overnight.
The dollar strengthened 0.54% to 0.795 against the Swiss franc, on track to snap two consecutive sessions of losses.
The euro was lower against the dollar after German business morale fell unexpectedly in September. It was last down 0.69% at $1.1734 after rising for the last two sessions. Sterling declined 0.58% to $1.3443. It was steady against the euro, at 87.27 pence.
INFLATION AND JOBS MARKET IN FOCUS
"The dollar is a little firmer broadly against most of the G10 although it is still choppy and range-bound," said Marvin Loh, senior global market strategist at State Street in Boston.
"Based on our flows and holdings data, the dollar is still very underweight kind of within the real money community so I think it's due for a period of consolidation and that's ultimately what it's doing."
Powell maintained a cautious tone on Tuesday, saying the Fed needed to continue balancing the competing risks of high inflation and a weakening job market in coming rate decisions.
Markets are expecting quarter-point rate cuts at the remaining two Fed meetings this year and another in the first quarter of 2026, in line with the central bank's guidance after last week's meeting.
This week's U.S. data will be in focus, particularly Friday's release of the personal consumption expenditures price index, a key input for shaping expectations on the Fed's next policy steps.
"We are still data point-to-point with regard to the Fed, and that's going to be the catalyst for rates and the dollar in terms of determining how aggressive or hawkish the market starts to view the Fed," Loh added.
The U.S. dollar index, which measures the currency against six major rivals, added 0.65% at 97.87, attempting to claw back ground after two straight losing sessions.
San Francisco Fed President Mary Daly will speak later in the day.
"The market is adjusting after what has been quite a rally in these other currencies," said Axel Merk, president and chief investment officer at Merk Hard Currency Fund in California. "So even with the absence of news, you would expect some sort of breather. . . Powell was more explicit in the uncertainty ahead and I had the feeling in the press conference that he was bending over backwards in arguing why he needs to cut rates even though inflationary pressures continue to persist. But he was a bit more open-ended now and so maybe that's a bit more hawkish."
NEW ZEALAND CENTRAL BANK GOVERNOR
Candidates for the next leader of Japan's ruling Liberal Democratic Party answered journalists' questions on Wednesday. Frontrunner Sanae Takaichi, a fiscal and monetary dove, said monetary policy was up to the Bank of Japan but higher rates could affect mortgages and corporate investment.
Against the yen, the dollar added 0.83% to 148.85 yen, hitting its highest in three weeks and set to snap three straight sessions of losses.
New Zealand's dollar traded down 0.79% at $0.581 after Swedish central banker Anna Breman was named as the next Reserve Bank governor, becoming the first woman in the role.
The Australian dollar weakened 0.29% versus the greenback to $0.658. Data showed that inflation climbed more than expected to 3% in August, less than a week before the Reserve Bank's next policy meeting.
(Reporting by Chibuike Oguh in New York; Additional reporting by Kevin Buckland in Tokyo; Editing by Marguerita Choy and Alison Williams)
Powell maintained a cautious tone, stating that the Fed needs to balance the competing risks of high inflation and a weakening job market in upcoming rate decisions.
The U.S. dollar gained against peers like the yen, Swiss franc, and euro, strengthening 0.54% against the Swiss franc and 0.83% against the yen.
This week's U.S. data, particularly the personal consumption expenditures price index, will be crucial in shaping expectations for the Fed's next policy steps.
Markets are anticipating quarter-point rate cuts at the remaining two Fed meetings this year and another in the first quarter of 2026, following the central bank's guidance.
Market strategists noted that the dollar is still underweight within the real money community and is due for a period of consolidation after recent fluctuations.
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