Investing.com – The U.S. dollar stabilized early in the European session on Monday, giving back some of the gains made following the failed assassination attempt on former U.S. President Donald Trump over the weekend, ahead of comments from Federal Reserve Chairman Jerome Powell.
At 05:45 ET (09:45 GMT), the dollar index, which tracks the U.S. currency against a basket of six other currencies, was unchanged at 103.785, after hitting a one-month low last week.
Dollar stabilizes ahead of Powell’s speech
The dollar and the benchmark index initially gained after Trump was hit in the right ear, leaving his face bleeding, after shots were fired at a campaign rally in Pennsylvania last weekend.
Trump is scheduled to appear at the 2024 Republican Party convention later this week and will likely be nominated as the party’s top candidate for president.
Analysts say the shooting boosts his chances of defeating Joe Biden, which could ultimately benefit the dollar given that Trump has signaled his intention to pursue more protectionist trade policies.
However, those gains dissipated ahead of comments from Federal Reserve Chairman Jerome Powell, who is scheduled to be questioned by David Rubenstein at the Economic Club of Washington DC.
US inflation showed signs of slowing last week, and Powell could spread expectations that the central bank will begin a rate-cutting cycle in September.
“Federal Reserve speakers will have to comment on the latest CPI data, and when compared to the June Dot Plot, there is a clear risk of dovish corrections in the communication from many FOMC members,” ING analysts said in a note.
Euro gains ahead of ECB meeting
rose 0.1% to 1.0910, with the euro at its highest level since March ahead of the European Central Bank’s latest monetary policy meeting later this week.
The ECB is widely expected to maintain current interest rates after cutting them in June.
“A weaker dollar supported EUR/USD in July – but we still believe that French political instability is a risk that cannot be ignored and at least point to the euro lagging most other pro-cyclical currencies in any new USD sell-off,” ING said.
Rating agencies Moody’s (NYSE:) and S&P Global are warning of a negative impact on the French economy from the political stalemate, in which no political party won an absolute majority in the last parliamentary elections.
The price fell slightly below 1.2988, trading near its highest level in more than two years, in the wake of the landslide election victory for the centre-left Labour government in Britain, with investors starting to view British markets as a potential sheltered haven amid rising political uncertainty in the US and elsewhere in Europe.
Yuan falls after tender Chinese GDP data
In Asia, it rose 0.1% to 157.96, with the yen depreciating slightly after strengthening sharply against the dollar delayed last week, prompting speculation whether the move was due to government intervention or a short-term squeeze on bets against the yen.
The exchange rate rose 0.2% to 7.2627, with the Chinese currency weakening near an eight-month low after China’s economy grew a less-than-expected 4.7% in the second quarter, amid mounting headwinds from tender consumer spending.
