Last month, the Fed cut interest rates by 25 basis points, taking their policy range to 3.50%–3.75% that’s a total cut of 75 basis points for the year, and it just goes to show how worried they are about the economy slowing down and inflation still being sticky.
Are Dollar Gains Probably Going to be Short-lived?
Even with the Dollar having recently gained, it’s still really under pressure in the bigger picture. It’s down nearly 9.5% this year due to low US yields and the lingering trade deal hang-up. Markets expect the Fed to cut rates at least two more times next year. If that happens, US yields could fall even further, effectively killing the dollar’s appeal relative to other major currencies.
Safe-haven Demand Is Still Here
Despite all of this, the Dollar is still attracting buyers when people get a bit nervous. Investors still think the US economy is a bit more solid than most other countries, which is probably helping keep a lid on downside pressures.
In the short term, though all eyes are on US Initial Jobless Claims with forecasts calling for a slight rise to 220,000 from 214,000 last month, and with all the holiday things going on in the markets, you wouldn’t expect much of a reaction in the price until the new year.
