(Aug 21): The dollar’s slump is fueling rallies in other major currencies, sending the euro and British pound to fresh 2024 highs as traders home in on the path ahead for global interest rates. 

A Bloomberg gauge of the dollar fell for a third-straight session on Tuesday to the lowest since March, extending its losses so far this month to about 1.9%. The drop comes as traders look ahead to any clues on the scale of rate reductions as Federal Reserve Chair Jerome Powell and other officials speak at an annual symposium in Jackson Hole, Wyoming. 

Weakness in the dollar helped push the euro to its strongest level of the year, around US$1.1130, on Tuesday. The pound rose as much as 0.5% to US$1.3052, the strongest since July 2023, while the Swiss franc rose more than 1% to the day’s high of 0.8540 per dollar. Treasuries rallied across the curve. 

“If you have US growth slowing and global growth holding relatively steady, that should lead to a lower dollar,” said Vasileios Gkionakis, head of Europe economics and strategy at Aviva Investors.

In Jackson Hole, traders will scour Powell’s Friday speech for any indications that the Fed will cut by a quarter-point — or more — in September. Before that, preliminary benchmark employment revisions from the Bureau of Labor Statistics on Wednesday may show less robust US job growth than previously estimated.  

“FX markets continue to get excited about potential dovishness from Jackson Hole weighing on the dollar,” said Skylar Montgomery Koning, a foreign-exchange strategist at Barclays. That view was fueled on Tuesday “by speculation over a large downward revision to the employment numbers.”