Investors are awaiting the outcome of the week to find out whether the Fed’s rate cut will be 25 or 50 points.
He global dollar The dollar weakened against some major currencies on Tuesday, consolidating Monday’s gains ahead of key data from the inflation and an expected presidential debate in USA, although neither outcome is likely to affect overall monetary policy.
He dollar indexThe dollar index, which compares the greenback to a basket of six major currencies, was steady or slightly lower at 101.63, Reuters reported. The dollar index is up 0.1% so far this year.
In turn, the greenback fell 0.5% against the yen and stood at 142.35 yen, not far from the one-month low of 141.75 hit on Friday. Against the Swiss franc, fell 0.3% to 0.8466 francs, while against the euro fell 0.1% to $1.1024.
Uncertainty about the Fed
Safe haven currencies like the yen and the Swiss Franc also gained ground amid a fall in bank stocks, analysts said, after the head of regulators at the Federal Reserve On Tuesday he outlined a plan to increase the capital of big banks by 9%.
That disappointed bank investors and some critics of the rule. The banking index S&P 500, fell 2.7% to 408.2, after earlier falling to a one-month low.
The Fed is expected to cut rates interest rates next week for the first time in more than four years. What is still up for debate, however, is the magnitude of the rate cut. Federal funds futures have priced in a 67% chance of a 25 basis point (bp) cut at the Sept. 17-18 policy meeting, and a 33% chance that the Fed could cut by 50 bp, according to Fed calculations. LSEG.
The odds of a 50 basis point cut rose to 50% on Friday after a mixed US jobs report.
“The general theme is consolidation. If you look at the one-month chart of the dollar index, We are basically in the middle of the range,” he said. Eugene Epstein, Head of Structured Products for North America at Moneycorp in New York.
“We have been rallying since the lows in late August and the driving factor for this has been mainly the rate front. The market had fairly high expectations for the Fed to cut next week… but some of those expectations have been reduced,” he added.
Source: Ambito
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