|

Fed rate cut 'more likely than not' amid high uncertainty around NFP report

The dollar gave back some of its gains on Tuesday, having posted advances against most of its major peers on Monday. Investors remain unsure as to whether the Fed will lower interest rates again at its 18th December meeting, but recent communications from FOMC members perhaps suggest that a cut is more likely than not.

Voting member Christopher Waller said earlier in the week that he still supported a December cut, as this would still allow ample room to slow the pace of rate reductions at a later date. Waller is just one voting member, however, and until markets are confident that this is a view shared by the majority of the committee, one-sided bets against the greenback could be limited.

The rest of the week will see the release of a handful of important economic data points.

Today’s revised PMI figures are not expected to rock the boat, but Friday’s nonfarm payrolls report almost certainly will. There is a high degree of uncertainty surrounding the data, not least as the October report appeared to be heavily impacted by hurricanes in the south.

Consensus is for an NFP print around the 200k level, but a downside surprise akin to last month’s report may be enough to seal the deal for a December Fed rate cut.

Author

Matthew Ryan, CFA

Matthew is Global Head of Market Strategy at FX specialist Ebury, where he has been part of the strategy team since 2014. He provides fundamental FX analysis for a wide range of G10 and emerging market currencies.

More from Matthew Ryan, CFA
Share:

Editor's Picks

AUD/USD shows resilience below 38.2% Fibo. near mid-0.7100s

The AUD/USD pair touches a one-and-a-half-week low, around the 0.7140 region during the Asian session on Monday, though it lacks follow-through. Spot prices currently trade just above mid-0.7100s, down nearly 0.25% for the day.


USD/JPY: Japanese Yen edges lower vs USD amid Middle East jitters as Fed, BoJ meetings loom

The USD/JPY pair attracts some buyers at the start of a new week and climbs closer to the 154.00 mark during the Asian session, reversing a part of Friday's losses. Spot prices, however, remain confined in a range held over the past week or so and within striking distance of a nearly seven-month low, touched last Tuesday, as traders await this week's key central bank events.


Gold: Fed’s rate decision to drive the next move
Gold reflects a subdued performance at the start of the Federal Reserve’s (Fed) monetary policy week at around $4,330. Fed’s interest rate expectations heavily influenced last week after the release of the hot United States (US) Producer Price Index (PPI) and Consumer Price Index (CPI) reports for August.
Pi Network extends gains as ecosystem development supports recovery

Pi Network (PI) extends its recovery on Monday, trading above $0.097 after two consecutive weeks of gains. Continued ecosystem development and improved developer tools are boosting utility. Meanwhile, the technical indicators point to a tentative recovery, but overhead Exponential Moving Averages remain a challenge and cap PI gains.

Canada CPI expected to show steady inflation in August

Canada’s August Consumer Price Index figures will be the focus of attention when published on Monday. Indeed, Statistics Canada data will provide markets with an update on price pressures following the Bank of Canada’s September 2 meeting, when officials kept the interest rate steady at 2.25%, broadly in line with analyst consensus.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight
The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.