The fallout of the French election will remain in the spotlight as opponents of France’s National Rally stepped up their bid to block the far-right party from power in Sunday’s run-off election.
The euro, which lurched to a two-week high on Monday after RN did not score an outright majority, was steady at $1.074475, while futures indicated the pan-European STOXX 600 index could move away from the two-month low it touched on Tuesday.
Powell stating that the U.S. is back on a “disinflationary path” was enough to put the dollar on the defensive, with Treasury yields lower even though he cautioned that more data is needed before policymakers could consider cutting rates.
“We just want to understand that the levels that we’re seeing are a true reading on what is actually happening with underlying inflation,” Powell said at a conference in Portugal sponsored by the European Central Bank.
So, the Fed is still data-dependent, making the next few inflation readings crucial in dictating where U.S. rates are headed by the end of the year. Traders are clinging to as much as two rate cuts this year from the Fed.
Minutes from the Fed’s June meeting are due later in the day and could offer clues on the central bank’s thinking on U.S. rates.
