The US dollar traded lower today, with the Dollar Index slipping to a multi-week low.
The currency could remain under pressure as market expectations for a more dovish monetary policy continue to grow.
Fed funds futures now assign roughly an 87% probability to a 25 bps cut at next week’s FOMC meeting, after a run of softer US data and increasingly dovish rhetoric from policymakers before the blackout period.
A cut would narrow yield differentials with other major economies and weaken the dollar’s appeal for carry trades. At the same time, markets are bracing for today’s ADP employment report and ISM services PMI, with consensus pointing to a cooldown in hiring and activity that would further reinforce the dovish narrative if confirmed.
Additionally, speculation that White House economic adviser Kevin Hassett could replace Jerome Powell as Fed Chair has gained traction following recent comments from President Trump, further fuelling expectations of a more dovish monetary policy path.
