The US dollar traded lower against most currencies on Tuesday, as news of fresh stimulus measures out of China raised optimism on the state of the global economy, lifting risk assets across the board at the expense of the safe-havens.
Macroeconomic news out of the US has had relatively mixed implications for the greenback so far this week. The September PMI figures continued to point to a solid expansion in the world’s largest economy, particularly in the key services sector. But Tuesday’s consumer confidence index was a big disappointment, posting its largest one-month decline since August 2021 (98.7).
The latter could be a bit of a blow to Democratic candidate Kamala Harris ahead of the upcoming election, while it also raises the risk that the Fed could follow up its jumbo September rate cut with another one in November - a 50bp rate cut is now roughly 60% priced in for the 07/11 meeting. A handful of FOMC members are on the docket to speak on Thursday, including chair Jerome Powell. Expect heightened volatility in the dollar in the coming days should officials attempt to steer the market in one direction or the other.
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