US Dollar Index under pressure ahead of the Fed’s expected interest rate decrease on Wednesday.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six other major currencies, has retraced its previous session’s gains. The DXY trades around 100.80 during Asian hours, ahead of the Federal Open Market Committee’s (FOMC) monetary policy meeting on Wednesday.
This weakness of the US dollar could be linked to the Improved risk sentiment comes as the US Federal Reserve (Fed) is expected to announce a massive 50 basis point rate drop at its September meeting later in the North American session.
The CME FedWatch Tool predicts that the probability of a 50 basis point drop has increased to 63.0%.
The CME FedWatch Tool shows that markets expect a 37.0% probability of a 25-basis-point rate drop, while the possibility of a 50-basis-point decrease has risen to 63.0%, up from 62.0% the day before.
However, the US Dollar Index (DXY) rose after the announcement of stronger-than-expected US Retail Sales data on Tuesday. Retail sales rose by 0.1% month on month in August, following a revised 1.1% increase in July and above predictions of a 0.2% fall. This data suggests that consumer spending is resilient. Meanwhile, the Retail Sales Control Group increased by 0.3 percent. , little lower than the previous month’s 0.4% gain.
JP Morgan CEO Jamie Dimon said a Fed interest rate drop would be “not earth-shattering.”
JP Morgan CEO Jamie Dimon said Tuesday that whether the Fed lowers interest rates by 25 or 50 basis points, the impact will be “not earth-shattering.” Dimon underlined that, while the Fed must make these adjustments, they are rather insignificant in the broader picture, as “there’s a real economy” operating beyond the Fed’s rate increases, according to Bloomberg.
