Dollar keeps falling after rate cut signal

The dollar kept losing ground to other major currencies on Friday in Asia after the U.S. Federal Reserve signaled an interest rates cut to prop up economic growth.

The U.S. dollar index that tracks the greenback against a basket of six currencies was down 0.08% to 96.062 by 12:08 PM ET (04:08 GMT).

The USD/JPY pair was down 0.17% to 107.10, below a five-month low of 107.20 yen reached on Thursday after Fed Chairman Jerome Powell suggested that a rate cut could occur at the next policy meeting in July.

The U.S. central bank suggested earlier in the week that it could ease monetary policy as early as next month amid mounting concerns over the economic impact of global trade tensions and subdued inflation.

“The dollar’s upside is capped, because we are already looking past the Fed’s July meeting for more rate cuts,” Reuters quoted Junichi Ishikawa, senior foreign exchange strategist at IG Securities.

The 2019 G20 Summit in Osaka next week is attracting some attention where U.S. President Donald Trump and Chinese President Xi Jinping will meet amid the ongoing trade row. Both sides have confirmed a meeting between the two leaders on the sidelines of the summit.

“Central banks are in a competition to ease policy, so it’s a question of which currency to sell. There are some hopes surrounding G20, but we’ve been here before, only to be disappointed,” said Ishikawa.

The USD/CNY pair inched up 0.12% to 6.8590.

Kiwi and Aussie dollar both took advantage of the greenback’s weakness, the NZD/USD pair gained 0.2% to 0.6598, while the AUD/USD pair rose 0.12% to 0.6930.