Dollar moves in positive zone despite prospects of early rate cuts

Economies.com
2023-12-04 11:59AM UTC

Dollar rose in European trade on Monday against a basket of major rivals, on track for the third profit in four days on active short-covering.

 

The gains come despite strong prospects of early interest rate cuts by the Federal Reserve in 2024, potentially even in March.

 

The Index

 

The dollar index rose 0.3% to 103.52, with a session-low at 103.06, after losing 0.3% on Friday, resuming losses and trading near three-month low at 102.47 following  cautious remarks by Fed Chair Jerome Powell. 

 

Powell 

 

Fed Chair Jerome Powell said on Friday that it's clear the monetary policy is slowing the economy down as expected, with interest rates reaching appropriate tightening levels, however he still opened the way for further policy tightening if needed

 

US Rates

 

Odds for a US interest rate hike at the December Fed meeting fell to just 2.5%

 

Odds for an interest rate cut by the Fed in March surged to 64%, while odds for a cut in May surged to 90%.

 

Economic Slowdown 

 

Powell's remarks came after data showed the US manufacturing sector remained soft in November, showing the impact of US policy tightening.

 

The ISM Institute showed the manufacturing PMI remained at 46.7 in November, the 13th month in a row of a result below 50, which separates contraction from growth.

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