The dollar awaits the Fed minutes
The dollar has seen a surge in demand since last week’s strong Friday payrolls report led the market to largely dismiss the option of another 50 basis point cut for November in favor of a much more traditional 25 basis point reduction.
According to CME’s FedWatch tool, investors at this time now estimate an 85% chance that a quarter basis point cut will be made, as well as a small chance that the Fed will keep rates unchanged.
Attention is now focused on the release of the minutes from the Fed’s September meeting, scheduled for later in the session.
During this meeting, the Fed made the determination to cut rates by 50 basis points, and the minutes are likely to show the reasons behind this decision. That said, Fed policymakers have been overly active over the past few days, so it may be debatable whether the minutes can provide anything new.
On Thursday, the consumer price index for September will be released, which is also likely to influence the Fed’s outlook.
Euro slips ahead of European Central Bank meeting
In Europe, the EUR/USD was down 0.2% to 1.0962, with the euro depreciating on the back of better-than-expected German trade data, which raised hopes of a recovery in the eurozone’s largest economy.
Exports in Germany rose by 1.3% in August on month-on-month levels, according to official data revealed Wednesday, defying estimates of a 1.0% drop.
The European Central Bank will meet next week and is expected to ease monetary policy again, after cutting rates twice this 2024, due to weakening economic growth and easing inflationary pressures.
“A cut is very likely and it won’t be the last, the pace will depend on how the fight against inflation progresses,” ECB policymaker Francois Villeroy de Galhau said in an interview on Wednesday.
GBP/USD fell 0.2% to 1.3081, not far from Monday’s three-week low of 1.3059.
“The British press is starting to reach a feverish pitch with its speculation about what Chancellor Rachel Reeves will present in her first budget on Oct. 30,” analysts at ING mentioned, in a note.
“Investors remain on the lookout for any signs that the U.K. Gilt market is once again getting nervous about potential spending plans.”
New Zealand dollar falls on the back of rate cut
NZD/USD was down 0.9% at 0.6085, with the Kiwi dollar hitting its lowest level on record since August 19 after the Reserve Bank of New Zealand cut interest rates by 50 basis points and left the door open to even more aggressive monetary easing.
USD/JPY rose 0.2% to 148.53 after touching a seven-week high of 149.10 on Monday. The yen could see volatility in the weeks ahead as Japan is due to hold an election on October 27, ahead of the Bank of Japan’s monetary policy meeting. On top of this, there is the US presidential election next month.
USD/CNY rose 0.1% to 7.0643, after the pair gained 0.6% in the previous session as trading resumed in full swing after the Golden Week vacation.Dollar rises pending Fed minutes; euro devalues
The dollar awaits the Fed minutes
The dollar has seen a surge in demand since last week’s strong Friday payrolls report led the market to largely dismiss the option of another 50 basis point cut for November in favor of a much more traditional 25 basis point reduction.
According to CME’s FedWatch tool, investors at this time now estimate an 85% chance that a quarter basis point cut will be made, as well as a small chance that the Fed will keep rates unchanged.
Attention is now focused on the release of the minutes from the Fed’s September meeting, scheduled for later in the session.
During this meeting, the Fed made the determination to cut rates by 50 basis points, and the minutes are likely to show the reasons behind this decision. That said, Fed policymakers have been overly active over the past few days, so it may be debatable whether the minutes can provide anything new.
On Thursday, the consumer price index for September will be released, which is also likely to influence the Fed’s outlook.
Euro slips ahead of European Central Bank meeting
In Europe, the EUR/USD was down 0.2% to 1.0962, with the euro depreciating on the back of better-than-expected German trade data, which raised hopes of a recovery in the eurozone’s largest economy.
Exports in Germany rose by 1.3% in August on month-on-month levels, according to official data revealed Wednesday, defying estimates of a 1.0% drop.
The European Central Bank will meet next week and is expected to ease monetary policy again, after cutting rates twice this 2024, due to weakening economic growth and easing inflationary pressures.
“A cut is very likely and it won’t be the last, the pace will depend on how the fight against inflation progresses,” ECB policymaker Francois Villeroy de Galhau said in an interview on Wednesday.
GBP/USD fell 0.2% to 1.3081, not far from Monday’s three-week low of 1.3059.
“The British press is starting to reach a feverish pitch with its speculation about what Chancellor Rachel Reeves will present in her first budget on Oct. 30,” analysts at ING mentioned, in a note.
“Investors remain on the lookout for any signs that the U.K. Gilt market is once again getting nervous about potential spending plans.”
New Zealand dollar falls on the back of rate cut
NZD/USD was down 0.9% at 0.6085, with the Kiwi dollar hitting its lowest level on record since August 19 after the Reserve Bank of New Zealand cut interest rates by 50 basis points and left the door open to even more aggressive monetary easing.
USD/JPY rose 0.2% to 148.53 after touching a seven-week high of 149.10 on Monday. The yen could see volatility in the weeks ahead as Japan is due to hold an election on October 27, ahead of the Bank of Japan’s monetary policy meeting. On top of this, there is the US presidential election next month.
USD/CNY rose 0.1% to 7.0643, after the pair gained 0.6% in the previous session as trading resumed in full swing after the Golden Week vacation.Publication date:
2024-10-09 12:57:20 (GMT)
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