Forex-Dollar Steadies Amid Rising September Fed Rate Cut Bets: What Investors Need to Know for Market Impact
TOKYO/LONDON – The US dollar remained steady on Thursday amid increasing market anticipation of a Federal Reserve interest rate cut next month. New York Fed President John Williams indicated that policymakers could consider easing if upcoming economic data support such a move.
Speaking to CNBC, Williams described the Federal Reserve’s September 16–17 meeting as “live,” with key inflation and labor market reports expected in the weeks ahead likely to influence the decision. According to LSEG data, markets are now pricing in an 89% probability of a 25-basis-point rate reduction and expect a total of 55 basis points of easing by the end of the year.
The dollar is also facing political pressure following President Donald Trump’s efforts to exert greater control over monetary policy. Trump is attempting to remove Fed Governor Lisa Cook and appoint a loyalist in her place—a move analysts warn could spark a prolonged legal battle.
Chris Turner, global head of markets at ING, noted, “Short-dated US yields remain near their recent lows, and most would conclude that this week’s attempt to remove the Fed’s Lisa Cook by President Trump is dollar-negative.”
Two-year Treasury yields, which are highly sensitive to policy expectations, dipped to their lowest level since May 1, adding further downward pressure on the dollar.
The dollar index, which measures the currency against six major peers, inched up 0.1% to 98.225 following two consecutive days of losses. The euro remained steady at $1.1630, demonstrating resilience despite French Prime Minister Gabriel Attal’s unexpected call for a confidence vote next month that could topple his minority government.
Against the Japanese yen, the dollar slightly declined by 0.03% to 147.34. The US currency also fell to its weakest level since November against the offshore Chinese yuan, trading down 0.2% at 7.1360.
In Asia, Japan’s chief trade negotiator Ryosei Akazawa abruptly canceled a scheduled trip to Washington, delaying the announcement of Tokyo’s $550 billion investment pledge in the United States tied to a tariff agreement. A government spokesperson stated that further discussions were needed “at the administrative level.”
— رويترز
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The growing likelihood of a Federal Reserve rate cut signals potential easing of US borrowing costs, which could spur increased investment flows into Oman and the broader Gulf region. However, political interference in US monetary policy and global uncertainties present risks of volatility in currency and capital markets. Smart investors and entrepreneurs should prepare for fluctuating dollar strength and explore opportunities in sectors likely to benefit from cheaper financing and increased foreign investment.
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