US Dollar Weakens, Markets Concerned About Domestic Economy and Politics
The US dollar remained weak against other major currencies on Thursday, driven by concerns about the US economy and increasing political pressure on the policymaking process. Weak labor data and speculation of an interest rate cut by the Federal Reserve further pressured the dollar.
Last week, the nonfarm payrolls report showed job growth far below expectations, triggering a sharp decline in the dollar. Furthermore, President Donald Trump fired the official responsible for the employment data and plans to quickly appoint a replacement for the Fed Board of Governors, as well as develop a list of candidates for the next central bank chairman.
This uncertainty has led market participants to increasingly expect interest rate cuts. According to CME FedWatch data, the probability of the Fed cutting rates by 25 basis points in September is now 94%, up sharply from 48% a week earlier. In total, the market is expecting more than 60 basis points of cuts this year.
Meanwhile, the euro weakened slightly to $1.1654 after strengthening 0.7% in the previous session, but remained supported by hopes of peace negotiations between Russia and Ukraine. Meanwhile, the US dollar index edged up 0.1% to 98.259, but remained in a downtrend. The pound sterling and the Australian dollar were stable, while Bitcoin fell slightly by 0.1% to $115.038. (ayu)
Source: Newsmaker.id
