The US dollar fell on Tuesday to its lowest level in seven months, amid expectations and bets that the US Federal Reserve will begin cutting interest rates starting next month.
The US dollar index fell against a basket of major currencies in the global market, as investors await comments from Jerome Powell, Chairman of the Federal Reserve, this week, during which he is likely to hint at cutting US interest rates in September.
US Interest Rate Forecast
This week’s focus will be on Powell’s speech in Jackson Hole, which could make investors hesitant to place big bets ahead of the event, and the minutes of the Fed’s final meeting, due out on Wednesday, will also be in the spotlight.
Powell’s speech in Jackson Hole on Friday will focus on whether he will signal that the Fed is likely to cut interest rates by 25 or 50 basis points in September 2024.
The chances of a larger cut (50 basis points) have receded since data last week showed higher-than-expected inflation in July as well as a strong retail sales report for the month.
Another key focus will be whether Powell signals a rate cut at every future meeting, but markets may be overestimating how quickly the Fed will move, according to a report by CNBC.
Traders are pricing in a 25% chance of a 50 basis point rate cut, down from 50% a week ago, with a 75% chance of a 25 basis point cut, according to the CME Group’s FedWatch tool; rates are expected to be cut by about 210 basis points by the end of 2025.
A poll conducted by CNBC also expected that the US Federal Reserve will begin its monetary easing policy at its next meeting in September, due to the consumer price index rising by 2.9% in July, less than expected, in addition to the US economy growing by 2.5% in the second quarter of 2024.
According to the poll of 13 analysts, the September meeting could see a 25 basis point cut, according to 76% of those surveyed, bringing the interest rate range at this meeting to between 5% and 5.25%.
Twenty-four percent of those surveyed were for a one-time 50 basis point cut at the September meeting.
Regarding the interest rate path until the end of 2024, analysts told CNBC, “The US Federal Reserve will move to cut interest rates twice until the end of this year by a majority of up to 77%, according to data that may be determined by the path of inflation during the coming period, while the opinions of 23% of analysts went to the Federal Reserve cutting interest rates more than twice, which may reach 3 times until the end of 2024.”
US dollar price in the global market
The dollar index fell 0.5 percent in the latest trading to 102 points, hovering near its lowest levels since January 5, 2024, and the euro rose 0.4 percent to $1.1071, its strongest level since December 2023.
The Australian dollar rose on optimism that China will offer fresh stimulus through shopping vouchers aimed at helping return growth to its target of around 5% this year.
The Australian dollar rose in the latest trading by 0.56% to 0.6703 US dollars and reached 0.6708 US dollars, its highest level since July 19.
In cryptocurrencies, Bitcoin fell 1.87% to $58,178.
Dollar price today in Libya
Locally, the US dollar fell by 0.57% in the parallel Libyan market to 7.01 Libyan dinars.
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2024-08-21 17:30:39