- The US Dollar Index hit a six-week low of approximately 97.30 on Tuesday.
- Market participants are looking forward to a significant US Non-Farm Payroll (NFP) Benchmark Revision Report, set for release for the year ending March 2025.
- Analysts from Standard Chartered Bank anticipate that the Federal Reserve may raise rates by 50 basis points in their upcoming meeting.
The US Dollar Index (DXY), which measures the dollar against six major currencies, is trying to find its footing after dropping to a near six-week low of about 97.30 during the European trading session on Tuesday.
The labor market in the US has been significantly impacted by tariffs imposed after President Donald Trump reentered the White House. The August NFP report reflected a continued decline in labor demand, with only 22,000 new jobs added—marking the worst performance since January 2021.
This deterioration in job market conditions has led to an increase in speculation that the Federal Reserve might cut interest rates at next week’s policy meeting.
As per the CME FedWatch tool, there’s an 11.6% probability that rates could be lowered to between 3.75% and 4.00% by 50 basis points, with the majority expecting a more standard cut of 25 basis points.
Standard Chartered Bank has raised its forecast for potential cuts by the Fed, revising their earlier estimate from 25 basis points, indicating that the labor market has “softened significantly” over the past six weeks.
During Tuesday’s trading session, eyes are on the forthcoming NFP Benchmark revision report regarding employment data set to be released for March 2025.
In 2024, the Fed cut rates by 50 basis points in September, and the subsequent revision report revealed that the economy had created 818,000 fewer jobs than initially anticipated.
