US Dollar Index strives to gain ground near 97.30 ahead of US NFP benchmark revision data
The US Dollar Index posts a fresh six-week low near 97.30 on Tuesday.
Investors await the key US NFP benchmark revision report for the year ending March 2025.
Analysts at Standard Chartered Bank see the Fed reducing interest rates by 50 bps next week.
The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, strives for a firm footing during the European session on Tuesday after posting a fresh six-week low near 97.30 earlier in the day.
Faltering United States (US) labor market conditions in the wake of tariffs imposed by President Donald Trump since his return to the White House. The US Nonfarm Payrolls (NFP) report for August showed on Friday that the labor demand has slowed down further, with employers adding fewer fresh workers. In August, the US economy added 22K fresh workers, the worst reading seen since January 2021.
Weakening US job market have led to a sharp increase in bets supporting interest rate cuts by the Federal Reserve (Fed) in the policy meeting next week.
According to the CME FedWatch tool, traders see an 11.6% chance that the Fed will cut interest rates by 50 basis points (bps) to 3.75%-4.00%, while the rest point a standard 25-bps interest rate reduction.
Analysts at Standard Chartered Bank have also raised expectations for the pace of interest rate cuts by the Fed in next week’s policy meeting to 50 bps, from 25 bps projected earlier, stating that the labor market had become “soft from being solid in less than six weeks".
In Tuesday’s session, investors will pay close attention to the NFP benchmark revision report for employment data through March 2025. The impact of the employment revision report will be significant on market expectations for the Fed’s monetary policy outlook.
In 2024, the Fed delivered a 50-bps interest rate cut in September after the payrolls revision report showed that the economy created 818K fewer jobs than had been anticipated earlier.
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