Dollar Slides on Bets of Larger Fed Rate Cut
The dollar index fell toward 101 on Friday, extending losses from the previous session amid growing expectations that the Federal Reserve could act more aggressively when it starts cutting interest rates next week.
Markets are currently assigning a 59% chance that the Fed will deliver a 25 basis point rate cut, with a 41% odds seen for a larger 50 bps reduction, according to CME's FedWatch Tool. That was a significant change in pricing when markets were almost certain that the Fed will opt for a modest quarter point rate cut following the US consumer inflation report on Wednesday.
Analysts pointed to media reports from Financial Times and the Wall Street Journal suggesting the Fed's decision would be a close call, as well as higher US jobless weekly claims as the main factors driving recent expectations. Meanwhile, data on Thursday showed that US producer prices rose more than expected in August.
Source : Trading Economics
