Key Takeaways:
The U.S. Dollar Index fell to a nine-day low amid growing expectations of a Federal Reserve rate cut.
Fed officials Neel Kashkari and Mary Daly both hinted that rate reductions could resume soon.
Weak jobs data has fueled market sentiment, with a 91% probability priced in for a September cut, according to LSEG.
The U.S. dollar declined to its lowest level in over a week on Wednesday, following dovish comments from senior Federal Reserve officials and renewed economic concerns.
According to Jinshi Data, the dollar weakened against a basket of major currencies after Minneapolis Fed President Neel Kashkari and San Francisco Fed President Mary Daly indicated that the Fed may consider cutting interest rates in the near term.
Their remarks follow last Friday’s weaker-than-expected U.S. nonfarm payrolls report, which added to speculation that the central bank is approaching a policy pivot.
Markets See 91% Chance of Rate Cut in September
Data from LSEG shows that U.S. money markets are now pricing in a 91% probability of a September interest rate cut. This marks one of the highest expectations of easing this year, as investors react to softening labor market indicators and increasingly dovish Fed commentary.
The U.S. Dollar Index (DXY) slipped below key support levels, with analysts noting that the dollar's yield advantage is eroding as global markets brace for looser monetary policy.
Crypto and Risk Assets Watch Closely
The weakening dollar and rising odds of rate cuts could have implications for Bitcoin and broader crypto markets, which often benefit from dollar softness and falling real yields.
Analysts note that a confirmed pivot from the Fed could push BTC back toward the $120,000 resistance zone, provided broader macro conditions remain stable.
What to Watch Next
Thursday's jobless claims and inflation expectations data for further signs of economic slowdown.
Upcoming FOMC commentary ahead of the September policy meeting.
Market response from commodities and cryptocurrencies amid renewed USD weakness.
