Federal Reserve Rate Cuts Loom Amid Economic Uncertainty
The dollar strengthened slightly against the euro and yen after weak U.S. jobs data increased expectations for Federal Reserve rate cuts. Goldman Sachs anticipates three rate cuts, with potential for a larger cut in September. Market activity suggests rate adjustments, influenced by economic indicators and political factors.
The dollar saw a slight boost against the euro and yen after disappointing U.S. jobs data led to heightened expectations of Federal Reserve rate cuts. The currency, however, remained close to Friday's low levels as markets adjusted to new economic forecasts.
According to Goldman Sachs, the Federal Reserve is likely to instigate three consecutive 25 basis-point rate cuts starting in September. A larger, 50 basis-point cut could be on the cards if upcoming job reports show worsening unemployment. Meanwhile, the European Central Bank appears to have concluded its easing cycle.
In global markets, economic forecasts for the eurozone and Japan have been raised following positive trade developments. The mid-week firing of the Bureau of Labor Statistics head and the resignation of Fed Governor Adriana Kugler might solidify the FOMC's commitment to safeguarding its independence amidst political pressures.
(With inputs from agencies.)
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