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In the Asian market on Tuesday, the euro against the dollar recovered from the previous trading day’s losses and was trading around 1.1170. Air Force Gen. C.Q. Brown, chairman of the Joint Chiefs of Staff, told Reuters earlier on Tuesday that concerns about an impending wider conflict in the region had subsided.
There has been no further escalation in the fighting between Israel and Lebanese Hezbollah. Hamas, however, has rejected new Israeli conditions in ceasefire talks in Egypt, insisting that Israel abide by conditions proposed by US President Joe Biden and the United Nations Security Council.
In terms of Fed remarks, San Francisco Federal Reserve President Mary Daly said in an interview with Bloomberg TV on Monday that “the time has come” to start cutting interest rates, likely starting with a 25 basis point cut. Daly said that if inflation continues to gradually slow and the labor market maintains a “stable and sustainable” employment growth rate, then “policy adjustments at a regular, normal pace” will be reasonable.
In the euro, traders were assessing the extent to which the combined expectations of imminent rate cuts from the Federal Reserve would affect borrowing costs at the European Central Bank (ECB). Also expected later in the day will be the GfK Consumer Confidence Survey and Gross Domestic Product (GDP) data.
According to Bloomberg, ECB Governing Council member Olli Rehn said last week that slowing inflation coupled with a weak euro zone economy strengthened the case for lower borrowing costs next month. The bleak outlook for economic growth in Europe, particularly in the manufacturing sector, strengthens the case for a rate cut in September.
