According to Odaily, Mitsubishi UFJ Financial Group has indicated in a report that the recent softening of US economic data may heighten market expectations of a Federal Reserve rate cut, potentially leading to a decline in the US dollar next year. The report comes in the wake of Wednesday's weaker-than-expected ISM services report and ADP private employment data showing a slowdown in job growth.
Analyst Lee Hardman commented, 'Overall, these developments give us more confidence that US inflation and growth will continue to slow, which will encourage the US interest rate market to digest more Fed rate cuts in the coming year.' He added that this is a key assumption in the bank's expectation of a softening US dollar.
The report suggests that the weakening US economy could lead to a decrease in the value of the US dollar, as the market anticipates further rate cuts by the Federal Reserve. This is based on recent economic data, including a weaker-than-expected ISM services report and slowing job growth as indicated by ADP private employment data. The bank's analysts believe that these factors will continue to slow US inflation and growth, prompting the US interest rate market to anticipate more Fed rate cuts in the future.