The general index of the US dollar (Dollar Index) is trading at an increase of 0.20% this morning, Tuesday, the eighth of November, with the opening of the European session, trading at 110.40 levels, after strong declines in the last two trading sessions, in which the index lost more than 2.5%, affected by markets’ expectations that the US Federal Reserve will start To slow the pace of monetary tightening and raise interest rates at its next meeting in December.
Futures contract expectations, according to the CME FEDWATCH tool, indicate that the Fed may raise interest rates by 50 basis points at its meeting on the 14th of next December, by 52%, while expectations indicate that the hike will continue by 75 basis points, with expectations of 48%, which reflects the divergence in expectations. And thus stability in the movements of the US dollar.
The US inflation figures that the markets are awaiting after tomorrow, Thursday, will play a pivotal role in determining the Fed’s expectations for its next meeting, as estimates indicate a decline in inflation represented by the consumer price index in the United States of America to 7.9% in October, compared to 8.2% in the September reading, and thus expectations of a slowdown in the Fed will rise.
The US rate of raising interest rates in December. On the other hand, the markets are anticipating during today’s session the midterm elections of the US Congress, as some expectations indicate that the Democrats may lose control of one or both of the two houses, and therefore if the Republicans control one or both of the two houses, the stimulus process that the Democrats are looking for in the coming period will be affected and the market will translate it. Strong negative declines in the US dollar and positive bonds.
The euro is trading at 0.9995 levels, with slight declines against the US dollar this morning, as the US bank Goldman Sachs lowered its expectations for the pair to 0.94 in the next three months, compared to 0.97 in previous estimates.
02/11/2024
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