12.09.202501:43:39UTC+00Dollar Pressured by Fed Rate Cut Bets

The dollar index maintained stability around 97.6 on Friday, yet faced downward pressure as the most recent inflation data met expectations, affording the Federal Reserve the opportunity to consider policy easing amid a decelerating labor market. The Consumer Price Index (CPI) report for August indicated a monthly increase in consumer prices of 0.4%, slightly surpassing forecasts, while the annual inflation rate held steady at 2.9%, aligning with projections. Unemployment claims surged by 27,000 to reach 263,000, marking the highest level since 2021 and highlighting a weaker employment scenario. Market participants are evaluating a roughly 93% probability of a 25 basis point rate cut at the Federal Reserve's meeting on September 17, with the likelihood of a more substantial half-point reduction on the rise. In terms of policy, the United States and Japan released a joint statement emphasizing that exchange rates should be determined by market forces and identifying excessive volatility as undesirable. Concurrently, the European Central Bank maintained its benchmark interest rate at 2% for the second meeting in a row. The dollar appears set to conclude the week with a slight decline.