The dollar has given back most of its gains from earlier in the week after Fed Chair Powell’s Jackson Hole speech cemented expectations for a rate cut at the September FOMC meeting. That leaves the greenback on the backfoot heading into autumn. Even so, we remain of the view that, given the extent of Fed cuts already discounted in money markets (a bit more than our base case of 50bp of cuts this year and another 50bp in 2026), the dollar is more likely to stabilise over the coming months than fall sharply. That said, the risks are increasingly tilted towards the downside, with the Trump administration’s renewed efforts to exert control over the Fed a potential flash point.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services