U.S. Dollar Slides Amid Fed Rate Cut Speculation
16 September 2024 - 5:21AM
RTTF2
The U.S. dollar weakened against other major currencies in the
Asian session on Monday amid growing expectations of interest rate
cuts by the Federal Reserve and other central banks.
The U.S. Federal Reserve is all set to announce its first
interest rate cut for more than four years on Wednesday, but the
size of cut is shaping up to be a close call.
Recent U.S. inflation data has partly offset optimism the U.S.
Fed will lower rates more aggressively, but the central bank is
still expected to continue cutting rates over the next several
months.
The Bank of England is expected to leave rates on hold at 5.00
percent on Thursday and investors would be watching for a decision
over the pace of its bond sales.
The Bank of Japan meets on Friday and is widely expected to hold
rates steady, but a majority of economists still expect an increase
by year-end. Meanwhile, Asian stocks made a cautious start to the
week, with markets in mainland China, South Korea and Japan closed
for holidays.
China is closed for Mid-Autumn Festival, South Korea is closed
for Chuseok Thanksgiving Day, Malaysia is closed for Malaysia Day
and Indonesia is closed for Prophet Muhammad's birthday.
Growth worries returned to the fore after Chinese factory
output, retail sales and investment numbers for August all missed
expectations.
In the Asian trading today, the U.S. dollar fell to nearly a
14-month low of 139.95 against the yen, from Friday's closing value
of 140.82. The greenback may test support near the 139.00
region.
Against the euro and the pound, the greenback dropped to 10-day
lows of 1.1105 and 1.3163 from last week's closing quotes of 1.1076
and 1.3122, respectively. If the greenback extends its downtrend,
it is likely to find support around 1.12 against the euro and 1.33
against the pound.
The greenback slipped to 0.8453 against the Swiss franc, from
Friday's closing value of 0.8489. On the downside, 0.82 is seen as
the next support level for the greenback.
Against Australia, the New Zealand and the Canadian dollars, the
greenback edged down to 0.6731, 0.6181 and 1.3566 from last week's
closing quotes of 0.6703, 0.6156 and 1.3585, respectively. The next
possible downside targets for the greenback are seen around 0.68
against the aussie, 0.63 against the kiwi and 1.33 against the
loonie.
Looking ahead, Eurozone external trade for July and labor cost
for the second quarter are slated for release in the European
session.
In the New York session, Canada manufacturing sales data for
July, new motor vehicles sales data for July, U.S. New York Empire
State manufacturing index for September and U.S. NOPA crush report
are due to be released in the New York session.
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