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Market expectations for Fed rate cut cool, U.S. dollar index rises on 18th

2024-03-19

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As market expectations for the Federal Reserve to cut interest rates continue to cool, the U.S. dollar strengthened against a basket of currencies other than the Canadian dollar on the 18th. The U.S. dollar index (103.6238, 0.0472, 0.05%) fell in the overnight market, turned from falling to rising in the morning, and rose significantly at noon. expanded, then consolidated within a narrow range, and the U.S. dollar index rose in late trading.

The U.S. dollar index, which measures the U.S. dollar against six major currencies, rose 0.16% that day and closed at 103.594 in late foreign exchange trading.

Data released by the Chicago Mercantile Exchange's FedWatch Tool on the afternoon of the 18th showed that the probability of the Fed cutting interest rates at the June interest rate meeting was 57.7%, lower than 58.8% on the 15th and 71.6% a week ago.

Marc Chandler, chief market strategist at Bannockburn Global Forex, believes that Federal Reserve officials will maintain their forecast of three interest rate cuts this year at this week’s interest rate meeting. If that forecast changes, it's likely to be two instead of four. One thing that might surprise people is that the median estimate for unemployment among Fed officials could be higher.

Juan Perez, head of trading at foreign exchange brokerage Monex US, said that recently there have been some signs and statements from Bank of Japan officials that it is time to no longer maintain loose financial conditions. However, it is doubtful that the Bank of Japan will do so this week. If so, the market will be surprised.

On that day, international oil prices rose significantly and reached a high in more than four months. The Canadian dollar, which is closely related to oil prices, received support.

Data released by the European Statistics Department on the morning of the 18th showed that the consumer price index in the Euro (1.0870, -0.0003, -0.03%) zone increased by 0.6% month-on-month in February, in line with market expectations, while it fell by 0.4% month-on-month in January. The core consumer price index in the Eurozone increased by 0.7% month-on-month in February, in line with market expectations, while it fell by 0.9% month-on-month in January.

As of late trading in New York, 1 euro was worth $1.0871, down from $1.0890 on the previous trading day; 1 pound (1.2721, -0.0007, -0.05%) was worth $1.2730, down from $1.2739 on the previous day.

1 U.S. dollar was exchanged for 149.11 Japanese yen, higher than 149.04 yen on the previous trading day; 1 U.S. dollar was exchanged for 0.8880 Swiss francs, higher than 0.8839 Swiss francs on the previous trading day; 1 U.S. dollar was exchanged for 1.3534 Canadian dollars, lower than the previous trading day 1.3540 Canadian dollars; 1 U.S. dollar exchanged for 10.4385 Swedish krona, up from 10.3732 Swedish kronor in the previous trading day.

The above information is provided by special analysts and is for reference only. CM Trade does not guarantee the accuracy, timeliness and completeness of the information content, so you should not place too much reliance on the information provided. CM Trade is not a company that provides financial advice, and only provides services of the nature of execution of orders. Readers are advised to seek relevant investment advice on their own. Please see our full disclaimer.

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Market expectations for Fed rate cut cool, U.S. dollar index rises on 18th

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