The expected softening of the Fed policy is weighing on the dollar

Monday started with the expected signs in the market, as investors avoided big moves ahead of the US central bank Federal Reserve’s interest rate decision at the September interest rate meeting on Wednesday.

In the stock market, the prices in Europe were close to the closing levels of the previous week, and a cautiously neutral opening is also expected for the stock markets in the United States. Movements in the interest rate market were moderate.

The market interest rate for the 10-year government bond in the United States was down by two interest points, while in Europe interest rates were mostly down by about one interest point.

In the foreign exchange market, the dollar weakened sharply against other major currencies. The dollar had weakened by 0.7 percent against the yen, 0.6 percent against the pound and 0.5 percent against the euro.

You got 1.113 dollars for the euro and 139.87 yen for the dollar.

The market has long been waiting for the Fed to start the long-awaited interest rate cuts at the September interest rate meeting. The head of the Fed Jerome Powellin comments at the Jackson Hole central bank conference in August virtually guaranteed the start of interest rate cuts in September.

However, the employment data from the United States, which has been slower than expected in recent times, has made the market increasingly expect an even larger one-time decrease in the key interest rate in September.

The market is now pricing in a 63 percent chance that the Fed will cut interest rates at once from a range of 5.25 percent to 5.50 percent to a range of 4.75 percent to 5.00 percent, according to CME futures’ FedWatch tool. The most typical interest rate change is a 0.25 percentage point change in its direction.

“That’s it and that’s it. Powell has not clearly specified the scale of the bill. It may indicate that the Fed’s Open Market Committee has not yet reached a consensus. Tuesday’s retail figures may also influence the decision,” Rabobankin Senior US Strategist Philip Marey wrote according to Bloomberg.