Dollar Weakens as Jobless Claims and Inflation Data Strengthen Fed Rate Cut Expectations
GerikSummary:
The U.S. dollar fell for a second consecutive week after a surge in jobless claims and moderate inflation data reinforced expectations of Federal Reserve interest rate cuts...
Dollar Under Pressure Amid U.S. Economic Data
The U.S. dollar continued its decline on Friday, trading at 97.585 on the dollar index, following a two-day rally. This downward trend reflects growing investor anticipation of Federal Reserve rate cuts in response to economic signals. New weekly jobless claims in the U.S. rose at the fastest pace in four years, signaling softness in the labor market. Meanwhile, August’s inflation data showed prices rising at the fastest rate in seven months but remained broadly in line with expectations.
The mixed economic data has created some uncertainty around Fed policy. However, the market consensus currently favors a 25 basis point cut at the Federal Open Market Committee meeting on September 17, with investors tempering expectations for a larger 50 basis point cut later in the year. Benchmark 10-year Treasury yields ticked up slightly to 4.0282%, recovering from recent declines that nearly dipped below 4%, yet still reflecting overall easing expectations.
Currency Market Movements
Against major currencies, the dollar held relatively steady. It traded flat at 147.27 yen after a joint statement from U.S. and Japanese authorities emphasized that exchange rates should remain market-determined, warning against disorderly moves. The euro dipped to $1.1727 as traders reassessed prospects for further European Central Bank cuts following ECB comments suggesting a balanced risk outlook.
Other currencies saw minor movements: the Australian dollar rose slightly to $0.6665, near a 10-month high, while the New Zealand dollar slipped to $0.5971. Sterling weakened to $1.3572, and the offshore yuan remained essentially flat at 7.1135 per dollar.
The combination of rising jobless claims and moderate inflation strengthens the case for Fed rate cuts, although the market is cautious about the magnitude and timing of further easing. Investors are closely monitoring these indicators to assess the potential impact on borrowing costs, bond yields, and currency valuations in the near term.
Source: Reuters
To stay updated on all economic events of today, please check out our Economic calendar
Copyright © 2025 FastBull Ltd
News, historical chart data, and fundamental company data are provided by FastBull Ltd.
Risk Warnings and Disclaimers
You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.
