On August 24, 2024, the U.S. dollar experienced a significant decline as Federal Reserve Chair Jerome Powell provided a clear indication that the much-anticipated interest rate cut is likely to occur in September. This shift sent ripples through the currency markets, with sterling surging to its highest level in over two years. Additionally, the euro reached a 13-month high, while the dollar hit a 17-day low against the yen.

During his keynote address at the Kansas City Fed's annual economic symposium in Jackson Hole, Powell emphasized the need for a policy adjustment, citing reduced inflation risks and increased challenges in the labor market. This stance fueled market speculation, with traders placing a 65% probability on a quarter-point rate cut at the upcoming Federal Reserve meeting, while the likelihood of a more substantial 50-basis-point reduction also increased. The dollar's weakness was evident as the dollar index fell 0.81%, reflecting the broader impact of Powell's remarks on global currencies.

Sterling gained strength, rising to $1.32295, its highest since March 2022, supported by positive economic indicators from the UK. Meanwhile, the euro climbed to $1.1195, and the yen strengthened to 144.27 per dollar. Other currencies, including the Swiss franc and Canadian dollar, also saw gains against the greenback, as market participants digested the implications of a potential shift in U.S. monetary policy.

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