The global dollar reached seven-week highs and achieved its best week since 2022

The global dollar reached seven-week highs and achieved its best week since 2022

October 4, 2024 – 16:42

Traders’ expectations for a sharp new Fed rate cut were reduced by the solid jobs report in the United States.

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He global dollar reached a seven-week high in the early hours of Friday, after data showed that in USA More jobs than expected were created in September, prompting traders to reduce bets that the Federal Reserve (Fed) will cut rates again by 50 basis points at its November meeting.

He dollar index —which measures the performance of the greenback in relation to a basket of six other currencies of international relevance— stood at 102.69 units, the highest level since August 16, reaching its best week since September 2022, after that the publication of the non-farm payrolls showed an increase of 254,000 jobs last month, when previous estimates pointed to just an increase of 140,000 jobs, as reported by Reuters.

He unemployment also unexpectedly fell to 4.1% from 4.2% in August.

It’s a “blockbuster payrolls report by any measure. I think a no-landfall scenario for the U.S. economy has suddenly become much more plausible,” he said. Karl Schamotta, chief market strategist at Corpay in Toronto.

What will happen to Fed rates?

“Expectations of rate cuts are receding and the expectation now would be that the Federal Reserve exercise much more caution in relaxing its policy,” Schamotta added.

Improving economic data and more hawkish comments from Fed Chair Jerome Powell on Monday, in which he rejected expectations of continued giant rate cuts, have led traders to reduce bets on a rate cut. 50 basis points at the next meeting of the Federal Open Market Committee (FOMC) on November 6 and 7.

Those odds fell further after Friday’s data: Traders are now pricing in just a 10% chance of a 50 basis point rate cut, down from around 32% on Friday, the tool shows. FedWatch of the CME Group.

Bank of America The Fed is expected to cut rates by 25 basis points per meeting through March 2025, followed by 25 basis point reductions each quarter through the end of 2025, BofA U.S. economist said Aditya Bhave, in a report on Friday.

“The flow of data since the Fed’s decision to cut by 50 basis points in September has been remarkably positive,” he said, rating Friday’s report an “A+.”

Source: Ambito

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