Dollar and Euro Slide on Rate Cut Expectations, with US PCE and Eurozone CPI in Focus - Action Forex
Dollar and Euro are emerging as notable underperformers for the week, largely influenced by increasing market anticipation of interest rate cuts by Fed and ECB in the coming year, a sentiment that is also impacting treasury yields. In US, 10-year treasury yield, a key benchmark for market expectations, has dropped below 4.3% for the first time since September. This movement reflects the changing perceptions of investors, who are now factoring in a greater likelihood of a shift in Fed's policy. Market probabilities indicate less than a 50% chance of a rate cut by Fed in March 2024, but expectations rise to nearly 80% for May. The release of today's US PCE inflation data is eagerly awaited, as it could either confirm the market's expectations or lead to adjustments in the outlook.
Dollar and Euro are emerging as notable underperformers for the week, largely influenced by increasing market anticipation of interest rate cuts by Fed and ECB in the coming year, a sentiment that is also impacting treasury yields. In US, 10-year treasury yield, a key benchmark for market expectations, has dropped below 4.3% for the first time since September. This movement reflects the changing perceptions of investors, who are now factoring in a greater likelihood of a shift in Fed's policy. Market probabilities indicate less than a 50% chance of a rate cut by Fed in March 2024, but expectations rise to nearly 80% for May. The release of today's US PCE inflation data is eagerly awaited, as it could either confirm the market's expectations or lead to adjustments in the outlook.
