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U.S. dollar stabilizes after last week’s Fed rate cut
Traders see a 53% chance of another 50 bps Fed rate cut in November, per CME’s FedWatch Tool.
EUR/USD rebounds 0.2%, but eurozone business activity shows sharp contraction, led by Germany and France.
ECB could cut rates again in October amid ongoing economic weakness; GBP/USD remains steady near 2.5-year highs.
Chinese markets rise on stimulus hopes; Australian stocks trim losses after RBA holds rates steady.
Markets today:
The U.S. dollar is steadying after last week’s decline, which came in response to the Federal Reserve’s decision to cut interest rates. With a substantial 50 basis-point reduction marking the start of the Fed's rate-cutting cycle, the focus now shifts to how much further rates may drop this year.
Data from the CME Group's FedWatch Tool shows that traders see around a 53% chance of another half-point rate cut at the Fed's November meeting.
In Europe, the EUR/USD pair rose 0.2% to 1.1135, attempting a recovery after a roughly 0.5% drop overnight, following Monday's data that showed a sharp contraction in eurozone business activity this month. The downturn appeared widespread, with Germany, the region’s largest economy, experiencing a deeper decline, while France, the second-largest, slipped back into contraction.
The European Central Bank already cut rates for the second time this year last week, and continued signs of economic weakness could increase the likelihood of another rate cut in October.
Meanwhile, GBP/USD remained relatively flat at 1.3347, staying close to last week’s 2.5-year high after the Bank of England left interest rates unchanged.
In Asia this morning, Chinese markets led the way following reports of potential stimulus measures from Beijing. Australian markets, meanwhile, pared their losses after the Reserve Bank opted to keep interest rates unchanged.
Regional markets found some support from modest overnight gains on Wall Street, where U.S. markets remained near record highs. However, Wall Street futures slipped during Asian trading, hinting that the recent rally may be losing momentum.
