The US Dollar Index (DXY) lost steam Monday, settling just under the 100.00 mark in Asian trading. The rally that lasted five days finally took a breather. Traders started turning their attention to the growing buzz about a possible Federal Reserve rate cut in December. Now, everyone’s waiting to see what Tuesday’s Producer Price Index (PPI) will say about where the economy’s actually heading.
Rate Cut Hopes Pick Up
The mood around the Dollar softened fast as more people started betting on a December rate cut. The CME FedWatch Tool shows traders are putting the odds at 69% for a 25-basis-point cut next month. That’s way up from last week’s 44%. A few Fed officials only added fuel to the fire. New York Fed President John Williams said the Fed might cut rates “in the near term,” which just confirmed what a lot of traders were already thinking. Fed Governor Stephen Miran pointed to the latest Nonfarm Payrolls report as evidence for a December move and openly backed a 25 bps cut himself. Still, Boston Fed President Susan Collins said she hasn’t made up her mind yet, so not everyone at the Fed is on the same page.
Consumer Confidence Picks Up—But Only a Little
New numbers from the University of Michigan gave markets something else to chew on. The Consumer Sentiment Index rose slightly in November, hitting 51 – just above the expected 50.3 yet below October’s 53.6. Still, inflation forecasts softened; the one-year-out look view fell to 4.5%, while the longer-range estimate (5 years) went down to 3.4%.
