US Dollar slips amid increased Fed rate cut bets

Pound Sterling

The Pound (GBP) initially stumbled this week, as former Bank of England (BoE) Chief Economist Andy Haldane advocated for interest rate cuts. While BoE Governor Andrew Bailey refrained from commenting on the timing of rate cuts, economists anticipate loosening to begin later than markets expect, lifting Sterling. While the UK’s latest services PMI beat forecasts, GBP remained muted through to the end of the week.

Monday brings the latest distributive trades data from the Confederation of British Industry (CBI), expected to show a small improvement. However, as it is likely to remain negative, the Pound may struggle.


Anxieties over a German recession weighed on the Euro (EUR) at the beginning of the week, amid forecast the country will report another contraction in growth in the first quarter of 2024. Data releases were thin on the ground for the majority of the week, keeping trade limited. Mixed preliminary PMIs induced further choppy trade towards the end of the week amid deteriorating manufacturing activity.

The Eurozone’s CPI data for February is due for release on Friday. Will cooling inflation dampen the common currency?

US Dollar

The US Dollar (USD) slumped at the start of last week, as markets began to bet on more aggressive policy loosening from the Federal Reserve. This was further affirmed by the latest FOMC minutes skewing more dovish than expected. However, a surprise decrease in jobless claims allowed USD to recover.

The Fed’s preferred gauge of inflation is due to print on Thursday, and is expected to remain at 2.9%. This could boost the ‘Greenback’ by pushing back existing rate cut bets.

Australian Dollar

Mixed meeting minutes from the Reserve Bank of Australia (RBA) saw the Australian Dollar (AUD) begin on quiet ground. However, robust PMIs boosted the ‘Aussie’ in midweek trade.

The monthly inflation indicator for January is set for release on Wednesday. Headline inflation is expected to have ticked upward, which may lift AUD exchange rates.

New Zealand Dollar

Risk appetite drove the New Zealand Dollar (NZD) this week, allowing it to recover from a larger-than-forecast drop in retail sales during Q4 2023.

The Reserve Bank of New Zealand (RBNZ) are due to deliver their latest interest rate decision. If they keep rates unchanged, NZD may soften.

Canadian Dollar

The Canadian Dollar (CAD) slipped this week, amid volatile oil prices and a sharp cooldown in headline inflation rates.

The latest Canadian GDP data is due to print on Thursday, forecast to show a 0.2% contraction in Q4. This may weaken the ‘Loonie’ against its peers by sparking recession anxieties.

John Mulcahey

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