US Dollar Index Hits 14-Month Low Amid Rate Cut Speculation

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

• In the past week, the US Dollar Index weakened by 0.3% against a trade-weighted basket of its peers.

• The dollar index fell to 100.4 on Friday, continuing to hover near a 14-month low as soft US economic data reinforced expectations of further Federal Reserve rate cuts.

• The core PCE price index, the Fed’s preferred inflation gauge, rose just 0.1% in August, less than the 0.2% forecast, while the annual increase of 2.7% matched estimates. Personal income and spending also came in weaker than expected last month.

• Meanwhile, the latest weekly jobless claims report pointed to a resilient labour market. Investors now look ahead to the September jobs report this week for further guidance.

• Markets remain split on whether the Fed will cut rates by 50 basis points in November or opt for a smaller 25 bps reduction.