403
Sorry!!
Error! We're sorry, but the page you were
looking for doesn't exist.
Dollar struggles with expectations of rate cut, euro, sterling strengthen
(MENAFN) The U.S. dollar remained near a seven-month low on Tuesday as market speculation intensified that the Federal Reserve might begin cutting interest rates as early as next month. Traders are particularly focused on upcoming comments from Federal Reserve Chairman Jerome Powell, scheduled for Friday, which could provide critical insights into the central bank's future monetary policy. The dollar's weakness has boosted other major currencies, with the euro reaching its highest level this year, and the British pound holding close to a one-month high. Additionally, an index tracking emerging market currencies hit a record high, reflecting broader dollar softness.
This week, all eyes are on Powell's upcoming speech at the Jackson Hole symposium, a key event that often influences market sentiment. Investors are likely to be cautious, avoiding significant market moves ahead of the speech, which could offer clearer guidance on the Fed's next steps. Market participants are also anticipating the release of the minutes from the Federal Reserve’s most recent policy meeting, which are expected on Wednesday. These minutes could provide further context on the Fed's internal deliberations and reinforce or challenge current market expectations.
Investor sentiment suggests a growing belief that Powell will acknowledge the need for rate cuts, with close attention on whether the Fed might reduce rates by 25 basis points or 50 basis points in September. According to CME Group’s FedWatch tool, there is now a 75.5 percent chance of a 25 basis point rate cut next month, down from 50 percent a week ago, while the probability of a more aggressive 50 basis point cut has decreased to 24.5 percent. Traders are also pricing in a total of 93 basis points in rate cuts by the end of the year.
As a result of the dollar's softness, the euro traded at USD1.10775 on Tuesday, after briefly touching USD1.108775, marking its highest level since December 28. The euro has appreciated by 2.4 percent this month, positioning it for its strongest monthly performance since November. Meanwhile, the pound remained steady at USD1.2979 during Asian trading hours, after reaching a one-month high of USD1.2998 in the previous session. The dollar index, which tracks the U.S. currency against six major currencies, was last recorded at 101.95, following its lowest dip since January 2 at 101.82 earlier on Tuesday. The index has declined by more than 2 percent in August and is on track for a second consecutive monthly decline.
This week, all eyes are on Powell's upcoming speech at the Jackson Hole symposium, a key event that often influences market sentiment. Investors are likely to be cautious, avoiding significant market moves ahead of the speech, which could offer clearer guidance on the Fed's next steps. Market participants are also anticipating the release of the minutes from the Federal Reserve’s most recent policy meeting, which are expected on Wednesday. These minutes could provide further context on the Fed's internal deliberations and reinforce or challenge current market expectations.
Investor sentiment suggests a growing belief that Powell will acknowledge the need for rate cuts, with close attention on whether the Fed might reduce rates by 25 basis points or 50 basis points in September. According to CME Group’s FedWatch tool, there is now a 75.5 percent chance of a 25 basis point rate cut next month, down from 50 percent a week ago, while the probability of a more aggressive 50 basis point cut has decreased to 24.5 percent. Traders are also pricing in a total of 93 basis points in rate cuts by the end of the year.
As a result of the dollar's softness, the euro traded at USD1.10775 on Tuesday, after briefly touching USD1.108775, marking its highest level since December 28. The euro has appreciated by 2.4 percent this month, positioning it for its strongest monthly performance since November. Meanwhile, the pound remained steady at USD1.2979 during Asian trading hours, after reaching a one-month high of USD1.2998 in the previous session. The dollar index, which tracks the U.S. currency against six major currencies, was last recorded at 101.95, following its lowest dip since January 2 at 101.82 earlier on Tuesday. The index has declined by more than 2 percent in August and is on track for a second consecutive monthly decline.
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.
Comments
No comment