- The U.S. dollar index rose after Fed Powell said the central bank would cut interest rates “over time.”
- The CME FedWatch tool shows a 61.8% chance the Fed will cut interest rates by 25 basis points in November.
- The US ISM manufacturing PMI is expected to rise to 47.5 in September from 47.2 previously.
The US Dollar Index (DXY), which measures the value of the US dollar (USD) against a basket of six other major currencies, continued to rise for the second day in a row. The US dollar traded around 100.80 in the Asian session on Tuesday. The US dollar (USD) rose following the latest comments from Federal Reserve (Fed) Chair Jerome Powell.
Fed Chairman Powell said the central bank was in no rush and would cut interest rates over time. Powell said the latest 50 basis point cut should not be seen as a sign of similar attacks in the future, warning that future changes would be more dovish.
The CME FedWatch tool showed markets were looking at a 61.8% chance of a 25 basis point Fed rate cut in November, compared with a 38.2% chance of a 50 basis point rate cut the day before. The U.S. personal consumption expenditures (PCE) index rose 0.1% monthly in August, below the expected 0.2% increase and in line with the Federal Reserve’s 2019 inflation expectations. That raises the risk of Federal Reserve intervention. Reserve.
Later in the North American session, traders are likely to look at U.S. manufacturing data, including the ISM Manufacturing PMI, which is expected to rise to 47.5 in September from 47.2 previously. The report could provide a good overview of the state of American manufacturing.
