US DOLLAR FLATTENS AS MARKETS TURN ALL IN ABOUT FED RATE CUT

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  • The US Dollar struggles to find support as traders see Fed rate cuts as a given. 
  • All eyes will be on the Fed’s Chair Jerome Powell at Jackson Hole to confirm the cuts. 
  • The US Dollar index trades just above 101.00 and could fall to 100.00 if weak sentiment persists. 

The US Dollar (USD) trades broadly flat after it saw heavy selling at the start of the US session on Wednesday, triggering another leg lower towards a fresh 2024 low. The Nonfarm Payrolls revision highlighted 818,000 fewer jobs than previously estimated, the largest downward revision in over a decade, confirming market concerns about the US job market. Later, the release of the Fed Minutes for the July meeting confirmed that some members of the Federal Open Market Committee (FOMC) vowed for a rate cut back then, making this move almost certain in September. 

Although it looks like nothing can go wrong, big warning signs still need to be issued here. The Federal Reserve and Fed Chairman Jerome Powell have already advocated plenty of times that the risk of cutting too soon is one of their biggest fears. With the preliminary August Purchasing Managers Index (PMI) numbers, any strong figures might dampen the hope for either a big cut in September or further cuts down the line. 


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