{"id":14906,"date":"2024-09-05T06:15:21","date_gmt":"2024-09-05T06:15:21","guid":{"rendered":"https:\/\/www.vtmarkets.com\/?p=14906"},"modified":"2024-09-05T06:15:21","modified_gmt":"2024-09-05T06:15:21","slug":"dollar-falters-as-rising-bets-suggest-a-larger-fed-rate-cut","status":"publish","type":"post","link":"https:\/\/www.global-vtrader.com\/en\/analysis\/dollar-falters-as-rising-bets-suggest-a-larger-fed-rate-cut\/","title":{"rendered":"Dollar falters as rising bets suggest a larger Fed rate cut"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><strong>Key points:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Traders increase bets on a 50-basis-point rate cut, pushing the dollar lower.<\/li>\n\n\n\n<li>Safe-haven currencies like the yen and Swiss franc gain amid concerns over U.S. economic growth.<\/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 dipped on Thursday as traders raised their expectations of an outsized rate cut from the Federal Reserve later this month. Concerns over the U.S. economy\u2019s growth outlook, following weaker-than-expected data, have pushed investors toward safe-haven currencies like the yen. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This shift comes as global markets remain tense, with stocks showing losses as the growth outlook for the world\u2019s largest economy looks less promising than initially expected.<\/p>\n\n\n\n<h1 class=\"wp-block-heading has-medium-font-size\"><strong>Concerns over U.S. economic slowdown drive shift to safe-haven currencies<\/strong><\/h1>\n\n\n\n<figure class=\"wp-block-image size-large is-resized is-style-default\"><img decoding=\"async\" src=\"https:\/\/www.vtmarkets.com\/wp-content\/uploads\/2024\/09\/20240905-140739-1024x477.jpg\" alt=\"\nThe U.S. Dollar Index (USDX) on vtmarkets.com experienced sideways movement, closing at 101.215 after reaching a high of 101.270 and a low of 101.165. The 4-hour chart reflects a slight increase in volatility, with the price stuck between the 100.38 support level and the 102.00 resistance zone. The 5, 10, and 30-period moving averages signal some downward pressure, while the MACD histogram points to weakening bullish momentum. The MACD and signal lines are nearing a crossover, hinting at potential further weakness in the near term.\" class=\"wp-image-14909\" style=\"width:1450px;height:auto\" \/><\/figure>\n\n\n\n<p class=\"has-text-align-center wp-block-paragraph\"><em>See: Dollar index dips, trading at 101.260 as seen 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 the charts, the U.S. Dollar Index (USDX) saw some sideways movement, closing at 101.215 after reaching a high of 101.270 and a low of 101.165. The 4-hour chart reflects a minor uptick in volatility as the price remains trapped between the 100.38 support level and the 102.00 resistance zone. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The 5, 10, and 30-period moving averages indicate some pressure towards the downside, while the MACD histogram suggests waning bullish momentum, with the MACD and signal lines nearing a crossover, indicating potential further weakness.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Recent weak U.S. data, including the<a href=\"https:\/\/apnews.com\/article\/jobs-openings-unemployment-hiring-quits-layoffs-0cb975ad7da53b331e9c667fb92ebd31\" target=\"_blank\" rel=\"noopener\" title=\" fall in job openings\"> fall in job openings<\/a> to a 3.5-year low, has heightened concerns about the robustness of the U.S. labour market. This, in turn, has raised speculation that the Federal Reserve could lean towards a more dovish stance in its upcoming monetary policy meeting.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Immediate resistance remains at 102.00, and support is observed at the recent low of 100.38. A break above the resistance could see the dollar index aim for higher levels around 103.30, but a failure to hold the 100.38 support could send the index lower, potentially testing the 100.00 mark.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">These figures followed Tuesday\u2019s ISM manufacturing survey, which remained in contraction territory, further fuelling fears that the U.S. economy may be slowing more sharply.<br><\/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\">U.S. factories remained in slowdown mode in August, fueling fears about where the economy is headed, according to separate manufacturing gauges. <a href=\"https:\/\/t.co\/g0vvgtCXve\">https:\/\/t.co\/g0vvgtCXve<\/a><\/p>&mdash; CNBC (@CNBC) <a href=\"https:\/\/twitter.com\/CNBC\/status\/1830985357631836431?ref_src=twsrc%5Etfw\">September 3, 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\">Traders have responded by reducing exposure to riskier assets and seeking safety in currencies such as the Japanese yen and Swiss franc.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The yen emerged as the strongest performer, gaining 0.26% to 143.56 per dollar, bringing its weekly gains to nearly 2%. The Swiss franc, another traditional safe-haven currency, remained steady at 0.8461 per dollar, posting a weekly gain of 0.46%. In comparison, the franc\u2019s rise has been more subdued than that of the yen, reflecting different investor sentiments toward these two currencies.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>You might be interested: <a href=\"https:\/\/www.vtmarkets.com\/analysis\/safe-haven-yen-rallies-aussie-sinks-as-u-s-payrolls-test-approaches\/\">Safe-haven yen rallies, Aussie sinks as U.S. payrolls test approaches<\/a><\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\"><strong>Fed rate cut speculation grows as labour market pressures ease<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">For the Fed, the recent data suggests that the labour market is no longer a source of inflationary pressure. This shift may justify a rate cut, with traders now pricing in a 44% chance of a 50-basis-point reduction when the Federal Reserve meets later this month, up from 38% just a week ago.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">While the dollar remained weak, other major currencies like the euro and sterling showed little change, with the euro steady at $1.1083 and sterling at $1.3147. The dollar index, which measures the greenback against a basket of currencies, fell slightly to 101.25.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">All eyes are now on Friday\u2019s nonfarm payrolls report. Expectations are that the U.S. economy will have added 160,000 jobs in August, compared with July\u2019s increase of 114,000. The <a href=\"https:\/\/www.vtmarkets.com\/market_analysis\/week-ahead-uncertain-markets-brace-for-employment-data\/\">unemployment rate<\/a> is forecast to ease slightly to 4.2%.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In other currency movements, risk-sensitive currencies like the Australian and New Zealand dollars struggled amid the global risk-off sentiment. The Australian dollar fell 0.15% to $0.67155, while the New Zealand dollar dropped 0.2% to $0.6186. These currencies, closely tied to global economic outlooks, have suffered as traders shift focus to safer assets.<br><br><strong>You might be interested: <a href=\"https:\/\/www.vtmarkets.com\/blog\/education\/top-4-assets-to-inflation-proof-your-portfolio\/\">Top 4 assets to inflation-proof your portfolio<\/a><\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">As the market continues to digest economic data, the outcome of the Fed\u2019s upcoming meeting and the nonfarm payrolls report will remain critical in determining the dollar\u2019s path forward and the broader market\u2019s risk sentiment.<\/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 dipped on Thursday as traders raised their expectations of an outsized rate cut from the Federal Reserve later this month. Concerns over the U.S. economy\u2019s growth outlook, following weaker-than-expected data, have pushed investors toward safe-haven currencies like the yen. -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":[28,12],"class_list":["post-14906","post","type-post","status-publish","format-standard","hentry","category-analysis","tag-dollar","tag-forex"],"acf":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/posts\/14906","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=14906"}],"version-history":[{"count":0,"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/posts\/14906\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/media?parent=14906"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/categories?post=14906"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/tags?post=14906"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}