CME’s FedWatch tool indicates a 37.5% chance that the Federal Reserve will cut rates in March, up from 70% a month ago. A cut in May is considered practically discounted.
The index of dollar is heading to experience its first weekly decline of the year, influenced by the decline in US Treasury bond yields, generating nervousness in the banking sector.
As it is, traders’ attention is focused on the US employment data scheduled for release this Friday, as this could indicate when the Federal Reserve could initiate interest rate cuts.
On the international stage, the euro shows an increase of 0.2% against the dollar, standing at US$1.0885, after an advance of 0.49% the previous day. Likewise, the pound sterling experienced an increase of 0.15%, reaching US$1.2761, after an advance of 0.43% in the previous day.
In contrast, the dollar index, which evaluates the value of the greenback against six major currencies, registers a decrease of 0.12%, standing at 102.93, close to its weekly minimum. This drop points to a weekly loss of 0.5%, thus marking the first week of declines in the year and the largest since mid-December.
The financial outlook is being influenced by concerns surrounding the US banking sector, with regional banks once again giving ground, exacerbating the previous day’s losses. Furthermore, the 10-year Treasury yield continues to decline, with an additional 10 basis point drop, accumulating a loss of approximately 27 basis points on the week and trading at 3.891%.
Dollar vs. other currencies
Regarding the dollar against the Japanese yen, although it has experienced a decrease in the 1% throughout the weeka, shows a rebound on Friday, reaching 146.75 yen.
Attention is focused on the possible impact on bond yields following the release of the US nonfarm payrolls report later in the day. This development comes after the Federal Reserve’s latest monetary policy meetingin which rates remained stable, contrary to market expectations of cuts in March, defying Chairman Jerome Powell’s predictions.
CME’s FedWatch tool indicates a 37.5% chance that the Federal Reserve will cut rates in March, up from 70% a month ago. A cut in May is considered practically discounted.
Although the Bank of England decides to maintain interest rates at its meeting on Thursday, helping to contain the fall of sterling, its impact on the markets is overshadowed by the news from the United States. The global scenario remains uncertain, and investors remain attentive to economic developments that could influence the decisions of central banks and international financial markets.
Source: Ambito
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