By Ankur Banerjee
In a recent turn of events, the dollar has taken a hit as U.S. inflation shows signs of slowing down. This has led to speculation that the Federal Reserve might consider lowering borrowing costs in the near future. The euro, on the other hand, is sitting comfortably near an eight-month high, reflecting the market's sentiment towards a potential Fed rate cut.
Meanwhile, Japan's economy has shown unexpected growth, with the yen holding steady against the dollar. In the U.S., recent data indicates a moderate rise in the consumer price index, while inflation has slowed down to below 3% for the first time in a while.
Market experts are predicting a 25 basis point cut by the Fed next month, with some traders hoping for a more aggressive approach. The CME FedWatch tool shows a 64% chance of a 25 bps cut and a 36% chance of a 50 bps reduction.
Overall, the market seems to be gearing up for potential rate cuts by the Fed, with many anticipating a total of 100 bps cuts this year. The euro and sterling are holding steady, while the U.S. Dollar Index is on track for its fourth consecutive week in the red.
Investors are now waiting for U.S. retail sales data to be released later today, which could further influence market sentiments. The yen has moved away from its recent highs, and the New Zealand dollar has seen a slight drop following a cash rate reduction by the Reserve Bank of New Zealand.
Overall, the market outlook seems to be leaning towards potential rate cuts and economic adjustments by central banks around the world. It is essential for investors to stay informed and monitor these developments closely to make informed decisions about their investments.