Dollar Still Finds Itself Under Pressure As Investors Are Reassessing Rate Hikes

The trading value of the US dollar is currently moving lower. The latest trading session shows that the trading value of the USD was slightly in the negative zone.

A day prior to the latest trading session, the trading value of the USD had experienced a 1% dip.

USD Value Slipped Due to Inflation

A week prior to the last one, the trading value of the USD was flying high. It was the promising employment data shared by the Feds that caused a hike not only in the USD price but also in the stock markets.

The USD had started to gain momentum against all major currencies from around the world. The above-expectation job data had boosted the confidence of the investors in making more investments.

Inflation Data Shared by the Feds

Just as things were going well for the USD, the Feds shared the inflation data. Once again, the inflation data was promising as it was not as hot as the economists had predicted for July.

As a result, the investors were on the back foot. The investors have taken a step back as they are now eager to reassess the market situation. They want to reassess the entire situation before they place bets on the rate hikes.

This happened because the investors are not sure what the Feds are going to do with the rate hikes by the end of September.

It was expected that in the September meeting, the Feds would hike the interest rates by 75 bps. However, with the inflation rates falling faster than estimated, it is not confirmed what the Feds may do in September.

Investors have slashed their Expectations

For now, the investors are not placing their bets fully on the Feds increasing the interest rates by 75 bps. Therefore, they are not making as many investments as they would have if the 75 bps interest rate hike was to kick in.

If the Feds increase the interest rates, it will become the third month in a row witnessing an interest rate hike.

According to the economists, it is highly unlikely that the Feds would increase the interest rates by 75 bps.

Instead, there are speculations of interest rate hikes by 50 bps. Even for the 50 bps, there is only a 58% possibility that the Feds would increase the interest rates. On the other hand, the possibility of 75 bps is just 42%.

USD Vs Major Currencies

As the value of the USD has dipped, EUR has risen 0.23%. The value of the Japanese yen has surged 0.06%, while the sterling has gained 0.18% growth.

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