He global dollar rose to a two-week high on Tuesday against the euro, as traders prepare for a data-packed week, including Friday’s U.S. payrolls report that could determine the path of U.S. interest rate cuts. Federal Reserve (Fed).
This week, investors’ attention will be focused directly on the payrolls data from USA, after the chairman of the Federal Reserve, Jerome Powell, last month backed an imminent start to interest rate cuts in a gesture of concern about a weakening labor market.
This led to the dollar index, The index, which measures the U.S. currency’s strength against six major currencies, rose 0.2 percent to 101.84, after falling 2.2 percent in August, its worst monthly showing since November.
He dollar fell 0.7% against the yen on Tuesday to 145.89 yen after media reports quoted the governor of Bank of Japan reiterating in a paper presented to a government panel on Tuesday that the central bank would continue to raise interest rates if the economy and inflation behaved as policymakers currently expect. The Japanese yen has rallied 10% in the past two months, helped in part by official intervention.
Meanwhile, the euro fell 0.3% against the dollar to $1.1043 on Tuesday, after falling to a two-week low of $1.103375 earlier in the session.
US economic data
In a key week, economists polled by Reuters expect an increase of 165,000 jobs in the United States in August, compared with an increase of 114,000 in July. Before that, Wednesday’s job openings data and the job applications report unemployment on Thursday will be the center of attention.
An indicator of the manufacture U.S. labor force output rose last month from an eight-month low in July amid improving employment, but the overall trend continued to point to subdued factory activity, data showed on Tuesday.
“Overall, the report should allay some market concerns about the U.S. growth outlook,” he said. Michael Brown, “Any significant moves in the wake of the release will likely be relatively limited in nature, ahead of the broader services gauge due out on Thursday and of course with all eyes on Friday’s key employment report as the main determinant of whether the FOMC will opt for a 25 basis point cut, or a 50 basis point cut, at the September meeting,” Brown said.
Markets are pricing in a 63% chance of a 25 basis point (bp) cut when the Fed meets on Sept. 17-18, with a 37% chance of a 50 bp cut, the tool showed. FedWatch from CME. In total, about 100 bp of cuts have been discounted for the year.
Source: Ambito
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