US Dollar Index holds below 98.00 as weak jobs data firm Fed rate cut likelihood
- US Dollar Index could face challenges amid rising odds of rate cuts by the US Federal Reserve.
- CME FedWatch tool suggests a pricing of 92% of a 25-basis-point Fed rate cut in September, following the August jobs data.
- Fed’s Goolsbee remains uncertain if September is the appropriate time for an interest rate cut given ongoing inflation pressures.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is edging higher after registering more than 0.5% losses in the previous session and trading around 97.90 during the Asian hours on Monday.
The Greenback faced challenges amid rising United States (US) Federal Reserve (Fed) rate cut bets, following weaker-than-expected jobs data for August. The CME FedWatch tool indicates a pricing in 92% of a 25-basis-point (bps) rate cut by the Fed at the September policy meeting, up from 86% a week ago, with bets rising on a potential 50 bps reduction this month.
US Bureau of Labor Statistics (BLS) reported on Friday that the US Nonfarm Payrolls (NFP) rose by 22,000 in August, falling short of the market expectations of 75,000. This figure followed the 79,000 increase (revised from 73,000) recorded in July. Meanwhile, the Unemployment Rate increased to 4.3% August, as expected, against the 4.2% prior.
Federal Reserve (Fed) Bank of Chicago President Austan Goolsbee said in an interview on Bloomberg TV on Friday that sinking employment data is typically a cause for interest rate cuts. Goolsbee added that he is still unsure whether September is the right timing for an interest rate cut, as high inflation data is still cause for concern.
US President Donald Trump said on Sunday that European leaders would visit the United States (US) on Monday or Tuesday to discuss how to resolve the Russia-Ukraine war. Trump added that he was “not happy” about the status of the Russia-Ukraine war, after reporters asked about a massive Russian air assault overnight on Sunday, per Reuters.
