US recession fears lead to dollar sell off
Written by
Daily Currency Update
Disappointing US jobs data released on Friday has heightened concerns that the Federal Reserve may have made a critical mistake by not cutting interest rates during its last meeting. The weaker-than-expected employment numbers suggest the US economy could be slowing more rapidly than anticipated, raising fears that the Fed's inaction might leave it with insufficient time to prevent a potential recession.As a result, the likelihood of a significant reduction in borrowing costs at the Fed's next meeting has surged, with markets increasingly betting on a substantial rate cut to counter the growing economic risks.
Key Movers
Interest rate futures have now fully priced in two quarter-point rate cuts by the Bank of England (BoE) by its December meeting. This marks a shift in market expectations, as by the end of last week, only one rate cut was fully anticipated before the end of 2024, with the possibility of a second cut considered likely but not certain. The change in sentiment reflects growing confidence among investors that the BoE will need to ease monetary policy more aggressively to address economic challenges in the coming months.Expected Ranges
- GBP/USD: 1.2775 - 1.2845 ▲
- GBP/EUR: 1.1625 - 1.1695 ▼
- GBP/AUD: 1.9865 - 1.9935 ▲
- EUR/USD: 1.0945 - 1.1025 ▲