- EUR/USD extends last week’s gains near 1.1120 as rising bets for Fed large rate cuts weigh on the US Dollar.
- Soft US PPI and deepening concerns over labor market outlook prompt Fed jumbo rate cut bets.
- The ECB is expected to cut interest rates once again in the last quarter of the year.
EUR/USD extends last week’s gains near 1.1120 in Monday’s European session. The major currency pair rises as growing speculation for the US Federal Reserve (Fed) to begin the policy-easing cycle aggressively on Wednesday has weighed on the US Dollar (USD). The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, slides sharply to near 100.70.
According to the CME FedWatch tool, the probability of the Fed reducing interest rates by 50 basis points (bps) to the 4.75%-5.00% range in September has increased sharply to 61% from 30% a week ago.
Market expectations for the Fed reducing interest rates by 50 bps have increased significantly as the United States (US) annual Producer Price Index (PPI) data for August came in sharply lower than expected on Thursday.
The headline producer inflation rose at a slower pace of 1.7% year-over-year (YoY) from the estimates of 1.8% and July’s reading of 2.1%. Generally, a sharp slowdown in producer inflation results from growing worries over the demand outlook, which happens due to the weak purchasing power of households in a high-interest rate environment.
Meanwhile, market experts believe that the Fed will start reducing interest rates in Wednesday’s meeting as officials are worried about deteriorating labor market conditions, with growing confidence that inflationary pressures will sustainably return to the central bank’s target of 2%.
- EUR/USD extends last week’s gains near 1.1120 as rising bets for Fed large rate cuts weigh on the US Dollar.
- Soft US PPI and deepening concerns over labor market outlook prompt Fed jumbo rate cut bets.
- The ECB is expected to cut interest rates once again in the last quarter of the year.
EUR/USD extends last week’s gains near 1.1120 in Monday’s European session. The major currency pair rises as growing speculation for the US Federal Reserve (Fed) to begin the policy-easing cycle aggressively on Wednesday has weighed on the US Dollar (USD). The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, slides sharply to near 100.70.
According to the CME FedWatch tool, the probability of the Fed reducing interest rates by 50 basis points (bps) to the 4.75%-5.00% range in September has increased sharply to 61% from 30% a week ago.
Market expectations for the Fed reducing interest rates by 50 bps have increased significantly as the United States (US) annual Producer Price Index (PPI) data for August came in sharply lower than expected on Thursday.
The headline producer inflation rose at a slower pace of 1.7% year-over-year (YoY) from the estimates of 1.8% and July’s reading of 2.1%. Generally, a sharp slowdown in producer inflation results from growing worries over the demand outlook, which happens due to the weak purchasing power of households in a high-interest rate environment.
Meanwhile, market experts believe that the Fed will start reducing interest rates in Wednesday’s meeting as officials are worried about deteriorating labor market conditions, with growing confidence that inflationary pressures will sustainably return to the central bank’s target of 2%.
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