Currencies Hold Steady Ahead of Fed Clues

28 Aug 2024 , 11:02 AM

On Wednesday, the US dollar remained at its lowest level in more than a year against a basket of peers, with sterling trading just below multi-year highs as markets sought signals about the amount of a widely expected US interest rate decrease next month.

Bitcoin took the early Asia focus, plunging more than 6% after falling below support at $60,000.

Meanwhile, the Australian dollar rose to a multi-month high as the latest domestic consumer pricing data came in slightly higher than expected, increasing 3.5% year on year.

However, overall movements in the foreign exchange market were subdued as traders awaited further information on the status of the world’s largest economy.

Following Chair Jerome Powell’s dovish shift this week, investors are unified in their belief that the Federal Reserve will begin decreasing interest rates next month, with the dispute now focussing on whether it will be a massive 50 basis point decrease.

According to the CME Group’s FedWatch Tool, the current pricing indicates a 36% possibility of a greater cut, up from 29% a week earlier.

Markets, which are fully priced for a 25 basis point decrease next month, expect a little more than 100 basis points of easing by the end of the year.

For feedback and suggestions, write to us at [e-mail]