USD Index Hits 31-Week Low Amid Fed Rate Cut Speculation

US Dollar Index drops 1%, hitting a 31-week low. Markets now expect a Fed rate cut in September as economic warning signs emerge. Powell's speech in focus.

Published on 20 Aug 2024

, 1 minute read

Here’s this week’s overview of the US Dollar:


  • In the past week, the US Dollar Index declined by 1% against a trade weighted basket of its peers. The DXY index stood at 102.4 on Friday, a 31-week low. The dollar index was weighed down by expectations that the Federal Reserve will have to lower borrowing costs soon to avert an economic downturn.

  • On Friday, Chicago Fed President Austan Goolsbee said that the US labour market and some leading economic indicators are flashing warning signs, citing rising levels of credit card delinquencies.

  • Weaker than expected US housing starts numbers for July also added to the bearish sentiment.

  • Markets see a probability approaching 100% that the Fed will cut rates by 25 basis points in September, with a larger 50 bps reduction still on the table.

  • Investors now look ahead to Fed Chair Jerome Powell’s speech in Jackson Hole and the latest FOMC minutes later this week for further guidance on the monetary policy path.

  • The Dollar had losses against most major currencies but regained some ground versus the Yen in the past week.

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