USD Hits 13-Month Low as Rate Cut Bets Rise
The US Dollar Index falls 1.6%, hitting a 13-month low against the euro as Fed signals possible rate cuts.
Published on 28 Aug 2024
, 1 minute read
Here’s this week’s overview of the US Dollar:
In the past week, the US Dollar Index weakened 1.6% against a trade-weighted basket of its peers. The index fell toward 100.5 on Friday, hitting its weakest levels since July 2023 as Federal Reserve Chair Jerome Powell cemented hopes of an interest rate cut in September.
Powell said in his Jackson Hole address on Friday that the time has come to adjust policy amid rising risks to the labour market, while expressing confidence that inflation will return to the central bank’s 2% target.
Markets are placing higher odds on a 25 basis point rate cut next month, while still seeing 33% chance of a larger 50 bp reduction.
The dollar sank to a 13-month low against the euro and to a 2½ year low against sterling as BOE head Andrew Bailey said it was “too early to declare victory” over inflation.
The greenback also continued to weaken against the Yen as BOJ Governor Kazuo Ueda indicated willingness to hike rates further.
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