DOLLAR HITS FOUR-YEAR LOW VS EURO AHEAD OF FED’S RATE DECISION
Markets expect a 25bps rate cut Wednesday as U.S. jobs weaken; sterling, aussie also rally; BoE and BoJ decisions loom.
The U.S. dollar slid sharply on Tuesday, sinking to its weakest level against the euro since September 2021, as investors firmed up expectations that the Federal Reserve will begin cutting rates this week.
By mid-day, the euro was up about 0.7%, trading at $1.1838, while the U.S. Dollar Index which measures the greenback against a basket of six major currencies dropped to 96.787, its lowest since early July.
Markets widely anticipate the Fed will cut interest rates by 25 basis points on Wednesday, citing softening labor market data and easing inflation pressures. Some analysts are floating the possibility of a larger 50-basis-point move, though that is seen as less likely.
Other central banks are also in focus: the Bank of England is due to announce its decision on Thursday, and the Bank of Japan on Friday. Meanwhile, sterling and the Australian dollar have gained ground against the greenback amid these global shifts.
With global financial markets watching closely, all eyes are on the Fed’s updated economic projections and the tone of its rate statement, which are likely to set the tone for the coming months.
By: Itoro Etukudo
Source: Reuters
