| The dollar weakened against major currencies Friday, heading for a 2% August decline as traders prepare for Fed rate cuts next month. Here's where key assets stand amid shifting monetary expectations. USD: 2% Monthly Decline Locked InThe dollar index fell 0.09% to 97.803, on course for a hefty 2% decline in August against a basket of currencies. PCE inflation data came in as expected at 0.2% monthly, keeping the Fed on track for a widely anticipated rate cut at the September 16-17 meeting. Money markets are pricing in an 87% chance of easing, up from 63% a month earlier. The greenback initially firmed after the data but later gave up gains, failing to break a three-day losing streak. Trump's campaign to influence Fed policy continues weighing on the dollar. A federal judge will consider whether to temporarily block Trump from firing Fed Governor Lisa Cook while she pursues her lawsuit. "Market instability remains in focus, further fueled by media coverage surrounding Fed Governor Cook's hearing," notes Uto Shinohara at Mesirow Currency Management. Fed Governor Christopher Waller, reportedly under consideration to succeed Powell, said Thursday he wanted to start cutting rates next month and "fully expects" more cuts to follow. EUR: Upside Momentum BuildingThe euro gained 0.11% to $1.1696 Friday and was more than 2% higher for the month. The EURO traded to the upside this week with more expectations from traders for a continuous rally next week. However, resistance around 1.1720 will determine if this momentum continues. Euro zone inflation expectations remained mostly stable at or above the ECB's 2% target in July, while French consumer prices rose slightly less than anticipated in August. This data supports the euro's recent strength against the weakening dollar. GBP: Dollar Weakness Drives GainsSterling held flat at $1.3502 Friday but was more than 2% higher for the month. The POUND traded higher this week after the dollar showed great weakness. Traders anticipate that price could rally above 1.3560 if bearish pressure on the dollar continues. The pound's monthly performance reflects broad dollar weakness rather than specific UK strength, but the technical setup looks promising for further gains. JPY: Mixed SignalsThe dollar edged up 0.02% to 146.985 yen Friday but was 2.5% lower for the month. The yen continues to benefit from dollar weakness while navigating its own central bank policy uncertainties. GBPJPY: Range-Bound with Bullish HopeThe POUND-YEN traded in a ranging move all through the week, but traders believe there's still hope for a bull move from this level. However, a break above 199.50 would have the final say on whether this cross can push toward the psychological 200 level. This pair remains caught between pound strength and yen dynamics, making the 199.50 level crucial for determining future direction. GOLD: Exceeding ExpectationsGold exceeded expectations, trading as high as $3,447 before week's end. Spot gold rose 0.8% Friday to $3,443.19, gaining 4.7% in August for its best monthly performance since April. Expectations of continuation in the coming week are high with little bias for a retracement as traders increase bets on Fed rate cuts to near 89% probability. "Gold is benefiting from uncertainty around Fed independence, as shown by inflows into gold ETFs of just under 15 tons in the last two days," notes Commerzbank. However, the bank warns that "upside for gold above $3,400 is looking increasingly limited." BITCOIN: Bearish Run ExpectedBitcoin continues trading lower after making a pullback earlier last week. With bullish expectations fading and price now trading below $110,000, the market anticipates a bearish run ahead. The cryptocurrency's weakness contrasts sharply with gold's strength, suggesting investors prefer traditional safe havens over digital assets in the current environment. Week Ahead: Labor Report Crucial"FX markets remain range bound as investors await the next U.S. labor market report on September 5th," says Dan Tobon at Citi. This jobs report will be crucial in cementing Fed rate cut expectations before the September meeting. The dollar's 2% monthly decline reflects growing confidence that Fed easing is imminent, but the extent of cuts will depend on upcoming labor market data. With Trump's Fed influence campaign creating additional uncertainty, expect continued volatility as markets price in both monetary and political risks. Labor Day Launch: The Triple Bundle is Live NVIDIA Power Hour - Morning breakout signals on NVDA Slingshot Indicator - Momentum explosion detector S&R PRO Scanner - 24/7 support and resistance alerts The weekend buildup is over. The offer is live. Three specialized tools working together while you enjoy your holiday. Labor Day pricing is active now. Expires tonight at midnight. Claim your Labor Day bundle!!Regards, FindBetterTrades | 
Post a Comment
Post a Comment