Dollar Holds Decline Ahead of Fed Meeting
The dollar index held its recent decline to around 100.7 on Tuesday, hovering near its lowest levels in 14 months ahead of the Federal Reserve's two-day policy meeting, where it is expected to deliver an outsized rate cut.
Markets are currently pricing in a 67% chance that the Fed will lower the policy rate by 50 basis points, up from 25% a month ago, while odds for a modest 25 bps reduction stands at 33%, according to CME's FedWatch Tool. Those expectations came even after key inflation indicators for August came in hotter-than-anticipated last week, although the latest jobs data pointed to signs of a slowing labor market.
Investors also look ahead to US retail sales and industrial production numbers on Tuesday for more insights on the economy. Meanwhile, markets remain split on whether the Bank of England will cut rates again this week, while the Bank of Japan is expected to keep policy steady but signal further rate hikes.
Source : Trading Economics
