{"id":14802,"date":"2024-08-28T03:37:26","date_gmt":"2024-08-28T03:37:26","guid":{"rendered":"https:\/\/www.vtmarkets.com\/?p=14802"},"modified":"2024-08-28T03:37:26","modified_gmt":"2024-08-28T03:37:26","slug":"currencies-steady-as-markets-await-u-s-interest-rate-decisions","status":"publish","type":"post","link":"https:\/\/www.global-vtrader.com\/en\/analysis\/currencies-steady-as-markets-await-u-s-interest-rate-decisions\/","title":{"rendered":"Currencies steady as markets await U.S. interest rate decisions"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><strong>Key points:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The U.S. dollar index hovers near a 13-month low as markets anticipate Federal Reserve rate cuts.<\/li>\n\n\n\n<li>Bitcoin drops over 6%, dipping below $60,000, highlighting volatility in the cryptocurrency market.<br><\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity is-style-dots\" \/>\n\n\n\n<p class=\"wp-block-paragraph\">The U.S. dollar held near its lowest point in more than a year against a basket of currencies on Wednesday. This <a href=\"https:\/\/www.vtmarkets.com\/analysis\/dollar-steady-as-markets-brace-for-powell-bojs-ueda-aims-to-stabilise-yen\/\">stability in the dollar<\/a> comes as traders await crucial signals from the Federal Reserve on the expected interest rate cuts next month. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Meanwhile, the British pound and the euro are trading close to multi-year highs, reflecting the market\u2019s focus on U.S. economic data and its implications for future monetary policy.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In early Asia trading, cryptocurrency Bitcoin took a hit, dropping over 6% after breaching the $60,000 support level. This move underscores the continued volatility in the cryptocurrency market, even as traditional currencies remain relatively stable.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\"><strong>Traders on standby as anticipation builds around Fed\u2019s next move<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The foreign exchange market, in general, has seen muted movements as traders are largely in a holding pattern, waiting for new data on the state of the U.S. economy. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Market participants largely agree that the Federal Reserve will start cutting interest rates next month, following a<a href=\"https:\/\/x.com\/globaltimesnews\/status\/1828089534422417677\"> dovish signal from Fed Chair Jerome Powell<\/a> last week. The current debate centres on whether the cut will be a modest 25-basis point reduction or a larger, more aggressive 50-basis point cut.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\"><a href=\"https:\/\/twitter.com\/hashtag\/GTVoice?src=hash&amp;ref_src=twsrc%5Etfw\">#GTVoice<\/a>: <a href=\"https:\/\/twitter.com\/hashtag\/US?src=hash&amp;ref_src=twsrc%5Etfw\">#US<\/a> Federal Reserve Chair Jerome Powell\u2019s recent dovish remarks seem to indicate that the <a href=\"https:\/\/twitter.com\/hashtag\/Fed?src=hash&amp;ref_src=twsrc%5Etfw\">#Fed<\/a>\u2019s fight with inflation has finally reached a critical turning point. However, in light of the challenges facing the US economy, the US may need a more comprehensive policy\u2026 <a href=\"https:\/\/t.co\/1XksUHNnSY\">pic.twitter.com\/1XksUHNnSY<\/a><\/p>&mdash; Global Times (@globaltimesnews) <a href=\"https:\/\/twitter.com\/globaltimesnews\/status\/1828089534422417677?ref_src=twsrc%5Etfw\">August 26, 2024<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">There is now a 36% probability of a 50-basis point cut, up from 29% just a week ago. This shift indicates a growing sentiment among traders that the Fed may take more decisive action. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The market is fully pricing in a 25-basis point cut for next month, with expectations of a total of 100 basis points of easing by the end of the year.<\/p>\n\n\n\n<h1 class=\"wp-block-heading has-medium-font-size\"><strong>Focus shifts to U.S. GDP as inflation concerns ease<\/strong><\/h1>\n\n\n\n<p class=\"wp-block-paragraph\">Later this week, a preliminary estimate of the U.S. gross domestic product (GDP) for the second quarter is due, along with the Fed\u2019s preferred inflation measure, the Personal Consumption Expenditures (PCE) index. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">However, with market attention shifting from inflation concerns to the overall strength of the economy, the PCE data\u2019s impact might be less pronounced.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\"><strong>Dollar stabilises after nearing 13-month low<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The U.S. dollar index (USDX), which tracks the greenback against a basket of currencies, was last up by a mere 0.02%, at 100.61, barely above the 13-month low of 100.51 it hit earlier this week. <\/p>\n\n\n\n<figure class=\"wp-block-image size-large is-resized\"><img decoding=\"async\" src=\"https:\/\/www.vtmarkets.com\/wp-content\/uploads\/2024\/08\/20240828-112856-1024x462.jpg\" alt=\"The USDX weekly chart on vtmarkets.com illustrates a downtrend, with the dollar index trading around 100.570, just above a critical support level at 100.615. The Moving Averages (5, 10, 30) are sloping downward, signaling continued bearish momentum. The MACD indicator further reinforces this outlook, as the MACD line remains below the signal line and the histogram shows increasing negative momentum, indicating that the dollar's weakness may persist in the near term.\" class=\"wp-image-14803\" style=\"width:1450px;height:auto\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><em>See: Dollar index holds steady on the <a href=\"https:\/\/vtmarketsapp.onelink.me\/CD7D\/240525WA\">VT Markets app<\/a>.<\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Looking at chart history, the U.S. Dollar Index (USDX) has experienced a notable decline this month, depreciating by 3.4% and positioning it for its largest monthly drop since November 2022. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This sharp decline is representative of a broader weakening trend in the dollar, as global markets respond to a combination of economic data, shifting Federal Reserve policy expectations, and external factors influencing the currency market.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The weekly chart illustrates this downtrend, with the dollar index trading around 100.570, just above a critical support level at 100.615. The Moving Averages (5, 10, 30) are sloping downward, signaling continued bearish momentum. The MACD indicator further reinforces this outlook, as the MACD line remains below the signal line and the histogram shows increasing negative momentum, indicating that the dollar&#8217;s weakness may persist in the near term.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Traders are closely watching the 100.615 support level, as a breach below this threshold could accelerate the dollar&#8217;s decline, potentially targeting the next key support around 96.000. Conversely, if the dollar manages to stabilize and bounce back, resistance near the 104.000 level could be a barrier. <\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">In other markets<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Apart from the USDX, Sterling saw a slight dip to $1.32585, just below its highest level since March 2022, reached on Tuesday. The euro also slipped marginally, trading at $1.117825, still close to the 13-month peak it touched earlier this week. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The Japanese yen edged down by 0.18%, trading at 144.225 per dollar, retreating from Monday&#8217;s three-week high of 143.45.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>In case you missed, read: <a href=\"https:\/\/www.vtmarkets.com\/analysis\/gbpusd-rises-to-2024-high-on-positive-data-and-dollar-weakness\/\">GBPUSD rises to 2024 high on positive data and dollar weakness<\/a><\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In the crypto markets, Bitcoin was last down 4.37%, trading at $59,137.00 after an earlier slide of more than 6%.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">We see this sharp decline as representative of the uncertainty and volatility within the digital asset space, contrasting with the more measured moves in traditional forex markets.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Start trading now \u2014 click <\/strong><a href=\"https:\/\/www.vtmarkets.com\/trade-now\/?utm_campaign=account_c&amp;utm_source=dma&amp;utm_medium=website\"><strong>here<\/strong><\/a><strong> to create your live VT Markets account.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The U.S. dollar held near its lowest point in more than a year against a basket of currencies on Wednesday. This stability in the dollar comes as traders await crucial signals from the Federal Reserve on the expected interest rate cuts next month. -vtmarkets.com<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[27],"tags":[],"class_list":["post-14802","post","type-post","status-publish","format-standard","hentry","category-analysis"],"acf":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/posts\/14802","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/comments?post=14802"}],"version-history":[{"count":0,"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/posts\/14802\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/media?parent=14802"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/categories?post=14802"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/tags?post=14802"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}