Daily digest market movers: EUR/USD weakens on US Dollar’s recovery
- EUR/USD remains under pressure as the US Dollar (USD) bounces back after traders pare Federal Reserve (Fed) large rate cut bets for November. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, jumps above 101.00. According to the CME FedWatch tool, 30-day Federal Fund futures pricing data shows that the likelihood of the Fed reducing interest rates by 50 bps in November waned to 35.3% from 58% a week ago.
- Market speculation for Fed outsize interest rate cuts eased after Fed Chair Jerome Powell's comments at the National Association for Business Economics conference on Monday, which indicated that the central bank will reduce key rates by quarter-to-a-percentage in both meetings remaining this year. Powell said, "If the economy evolves as expected, that would be two more cuts by year's end, for a total reduction of half a percentage point more", Reuters reported.
- On the contrary, Atlanta Fed Bank President Raphael Bostic backed a second straight interest rate cut by 50 bps if the labor market data weakens unexpectedly. For fresh insights about the current labor market health, investors will focus on the United States (US) ADP Employment Change and the Nonfarm Payrolls (NFP) data for September, which will be published on Wednesday and Friday, respectively.
- In Tuesday’s New York session, the US Dollar will be influenced by the US ISM Manufacturing Purchasing Managers Index (PMI) for September and the JOLTS Job Openings data for August, which will be published at 14:00 GMT.
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