The DXY Index should continue to retreat from the top of its three-week range between 100.5 and 101.9, DBS’ Senior FX Strategist Philip Wee notes.
USD’s turn to fall lower ahead of next week’s FOMC meeting
“The futures market will likely be wrong in anticipating a larger 50 bps cut, reading too much into Fed Chair Jerome Powell’s remark at Jackson Hole that the Fed do everything it could to support a strong labour market as it made progress towards price stability. The S&P 500 Index has recovered to 5596, near its lifetime high of 5670, after its near-10% plunge over July 16-August 5 on fears that higher US joblessness heralded a US recession.”
“The Fed has never described the labour market as weak; Powell reckoned it was time to lower rates to avert a further cooling in the labour market. The US unemployment rate eased to 4.2% in August from 4.3%, while CPI inflation excluding food and energy rose to 0.3% MoM from 0.2% over the same period. Yesterday, PPI core inflation also rose to 0.3% MoM from -0.2%.” “Today, the University of Michigan consumer survey will likely show 1Y inflation expectations staying unchanged at 2.8% in September after three months of declines. Hence, we expect the Fed to deliver a 25 bps cut to 5.25-5.50% next week. However, through its Summary of Economic Projections, the Fed should be more explicit than its counterparts regarding its multiple rate cut trajectory over 2025-2026 amid a soft landing, keeping the pressure on the greenback.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD breaks below 1.1000 on stellar NFP
The buying bias in the Greenback gathers extra pace on Friday after the US economy created far more jobs than initially estimated in September, dragging EUR/USD to the area of new lows near 1.0950.
GBP/USD breaches 1.3100 after encouraging US Payrolls
The continuation of the uptrend in the US Dollar motivates GBP/USD to accelerates its losses and breaches 1.3100 the figure in the wake of the release of US NFP.
Gold rebounds from daily lows and flirts with $2,670
Following a post-NFP dip to the $2,640 region, Gold prices now embarks on an acceptable rebound and retest the area of $2,670 per ounce troy despite the marked advance in the US Dollar and rising US yields across the board.
US Payrolls surge in September, as 50bp rate cut ruled out
US payrolls data surprised on the upside in September, rising by 254k, smashing expectations of a 150k rise. The unemployment rate fell to 4.1% from 4.2%, average hourly earnings increased to a 4% YoY rate and there was a 72k upwards revision to the previous two months’ payrolls numbers.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.