US Dollar hovers around 10-week high as markets rebuff aggressive Fed rate cuts

LONDON (October 15) The US Dollar (USD) broadly consolidates on Tuesday after reaching a 10-week high on Monday, fuelled by investors’ views that the Federal Reserve won’t cut interest rates as quickly and aggressively as previously expected. Moreover, markets seem to be betting on a possible win for former President Donald Trump in the November 5 presidential election after several betting websites and polls showed the Republican nominee starting to lead. 

The US economic calendar is again rather light on Tuesday. Besides the NY Empire State Manufacturing Index for October, there is not much with the potential to thrill markets. Rather look for some moves coming from the three Fed officials that are scheduled to speak. 

Daily digest market movers: Fed speakers have their work cut out

• At 12:30 GMT, the NY Empire State Manufacturing Index for October is due. Economists expect it to fall to 2.3 from 11.5 previously.
• At 15:30 GMT, Federal Reserve Bank of San Francisco President Mary Daly delivers keynote remarks and participates in a moderated conversation and an audience Q&A in an event hosted by NYU Stern School of Business.
• Around 17:00 GMT, Federal Reserve Governor Adriana Kugler participates in a webcast about career opportunities and diversity in Economics.
• Federal Reserve Bank of Atlanta President Raphael Bostic will close off this trading day with comments while participating in a moderated conversation at the Gathering Spot on how the economy affects small businesses near 23:00 GMT.
• Equities are all over the place, with Chinese stocks having closed substantially lower, while Japan was up on the day. European equities look sluggish while US futures are rather flat. 
• The CME Fed rate expectation for the meeting on November 7 shows an  86.8% probability of a 25 basis point rate cut, while the remaining 13.2% is pricing in no rate cut. Chances for a 50 bps rate cut have been fully priced out. 
• The US 10-year benchmark rate is trading at 4.07%, a touch softer than the high from last week at 4.11% on Thursday.

FXStreet