The dollar and US Treasury yields pulled back from session highs on Wednesday after Federal Reserve Chair Kevin Warsh told the ECB Forum in Sintra that “risks to inflation appear to have diminished in recent weeks.” The remarks, which avoided forward guidance but acknowledged an improving price backdrop, helped the DXY index retreat from 101.60 to near 101.22 and pushed the two-year T-note yield down to 4.156 percent from 4.195 percent. The shift provided a modest global relief, allowing the S&P 500 and Brazil’s Ibovespa to pare earlier losses, though both benchmarks still closed lower.

The broader market tone remained cautious, shaped by the conviction that the Fed will raise rates at least once this year. Traders in New York noted that Warsh’s comments did little to dislodge that pricing, particularly after the ADP report showed the US private sector added 98,000 jobs in June, below the 110,000 consensus but still indicative of a resilient labour market. Technology shares led the decline on Wall Street, with a sharp sell-off in semiconductor stocks dragging the Nasdaq down 0.66 percent, while Meta Platforms surged 8.8 percent on news it is building a cloud business to sell excess AI computing capacity. Oil prices fell, with Brent crude down 1.14 percent to $72.12 a barrel, as shipping through the Strait of Hormuz gradually recovered and the US and Iran held indirect technical talks in Qatar.

In emerging markets, the Brazilian real was the worst performer among 33 liquid currencies tracked by Valor Pro, weakening 0.90 percent to R$5.2094. Analysts in São Paulo attributed the underperformance to a combination of global dollar strength, pre-election uncertainty—a new AtlasIntel poll showed President Lula leading Senator Flávio Bolsonaro 48.8% to 42.3% in a second-round simulation—and the US government’s announcement of sanctions against Brazilian nationals and companies over alleged ties to the PCC criminal group. The Ibovespa edged down 0.19 percent, pressured by lower commodity prices and the rotation away from risk assets, though it recovered from an intraday low of 169,665 points.

The next factual milestone is Thursday’s official US payrolls report, which will be released a day before the Independence Day holiday. The data is expected to recalibrate bets on the timing of the Fed’s next rate move, with markets currently pricing a hike by September. Any upside surprise in job creation or wage growth would likely renew upward pressure on yields and the dollar, while a significant miss could reinforce the narrative of diminishing inflation risks that Warsh highlighted.