(London) The dollar fell Wednesday ahead of a congressional hearing by the Federal Reserve chairman and data that could confirm expectations of an imminent rate cut, while bitcoin and gold remained near their record highs.
Around 5:30 a.m. (Eastern time) (11:30 a.m. in Paris), the greenback fell against the euro, which gained 0.18% to $1.0877. It also lost ground against the pound, which rose by 0.13% to $1.2723.
Fed boss Jerome Powell must answer questions from a House of Representatives committee on Wednesday and Thursday.
After the disappointing American economic data published in recent days, “the market’s expectations are for three to four reductions (rates, editor’s note) for 2024”, not far from the forecasts of the members of the monetary institution, who anticipate three reductions, note Deutsche Bank analysts.
For them, “it will therefore be interesting to see if Powell still validates this message, since we are only a few weeks before” new projections for the evolution of key rates, on the occasion of the meeting of the Monetary Policy Committee of the Fed.
Economists are currently counting on a first drop around June. On Thursday, the European Central Bank (ECB) must make its own decision on its rates.
Operators were also awaiting a monthly report on job creation in the US private sector for February. It will be followed by weekly unemployment claims on Thursday and the monthly report from the US Department of Labor on Friday.
“Sufficiently weak data would make it easier for Powell to cut rates the first time, while a stronger-than-expected data set would make Fed watchers wonder whether (the) should cut rates at a lower rate than expected. time this year,” said Ipek Ozkardeskaya, analyst at Swissquote.
Despite the UK’s tight public finances, UK Finance Minister Jeremy Hunt is due to announce tax cuts later today, alongside the latest economic forecasts from the government’s budget forecasting body (OBR).
“We don’t expect this budget to contain anything that could bring down the pound,” thinks XTB analyst Kathleen Brooks, or influence UK bond yields, “unless the OBR forecasts suggest that a new tax measure is inflationary.”
After its historic record the day before at $2,141.79, gold fell just 0.03% to $2,127.40.
Its price remained driven by “the intensification of bets on a reduction in interest rates by the Fed from June – a factor favorable to assets not carrying returns like precious metals”, summarizes Frank Watson, of Kinesis Money.
For its part, bitcoin, which had fallen heavily after its own absolute record on Tuesday, at $69,191, rose 4.89% to $66,432.
“Basically, demand is increasing thanks to the introduction” of a new investment on the American market, the bitcoin ETF, “which facilitates investment in cryptocurrencies for institutional players,” recalls Ipek Ozkardeskaya.
The analyst also mentions the “halving”, an event planned for April, which will reduce the supply of bitcoin, reinforcing its scarcity and therefore its price.