Fed signals its rate path: markets price in a September cut
The July meeting minutes revealed a growing number of easing supporters. The dollar weakened against major currencies and Treasury yields declined.
The Federal Reserve meeting minutes published yesterday showed that most committee members consider it appropriate to begin the easing cycle as early as the September meeting, provided inflation dynamics hold. Rate futures now price a 78% probability of a 25 bp cut.
The DXY dollar index reacted with a 0.4% decline while EURUSD climbed toward 1.0850. The 10-year Treasury yield slipped below 4.1% — a six-week low.
For traders, the key event of the week remains Friday's core PCE release: a print above forecast could quickly reverse market expectations and bring demand back to the dollar.
Source: Apex Capital Research Desk