Analysis: The Federal Reserve will open the door to rate cuts.
On August 1st, Philip Wee, a foreign exchange analyst at DBS Bank, pointed out that the US dollar index was almost unchanged at 104.07 ahead of today's FOMC meeting. During the overnight trading session, the US dollar briefly touched 104.80, close to the level it fell to on July 11 due to softer US CPI inflation.
The Federal Reserve should open the door to rate cuts before seeing the US unemployment rate data on August 2 and the CPI data on August 14, without supporting the market's aggressive bet (110% probability) on a rate cut in September.
Assuming the Federal Reserve's confidence in inflation returning to the 2% target increases, or its concerns about rising unemployment increase, it may provide forward guidance on the opportunity for a rate cut at the Jackson Hole symposium from August 24 to 26.
