The FOMC’s next rate policy announcement is less than a week away now (July 26th), and with an implied probability of 96.0%, a 25 basis-point hike to 5.50% is a virtual lock. From there the rate outlook becomes murky with minor probabilities of hikes and cuts through the FOMC’s next five meetings (March 20th of next year). But by January of 2025 markets are pricing in no less than five 25 basis-point cuts and an overnight rate of 3.785%.
The U.S. dollar index is -2.49% this month (after recovering from a low of -3.24%) and is -3.06% for the year.
The dollar’s current downtrend began in Q4 of last year, having declined 10.5% since the September 30th close.
Notable dollar declines this month: -3.94% vs. CHF, -3.49% vs. JPY, -2.47% vs. EUR, -2.10% vs. AUD, -1.75% vs. MXN, -1.41% vs. GBP, and -0.77% vs. CAD.
This year the Mexican peso has gained the most vs. the dollar among all major currency pairs, 16.19%. Next support for the USD/MXN is near 16.3500 (the late 2015 lows), which coincides with long-term 200 period moving average support at 16.3200.
U.S. Jobless Claims reported today for the week ending July 15th were 228k, less that the 240k estimate, underscoring the continued strength of labor conditions.
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