The euro remains under pressure and is trading at a three-week low against the dollar as investors revised their expectations for a sharp Fed rate cut this month. After a stronger than expected report on non-agricultural employment, traders are questioning confidence in the Fed's interest rate cut. The probability of reducing the rate by 50 basis points decreased from 25% to 5.9%. Moreover, investors also believe that the Fed will not cut rates at the September meeting. Against this background, the dollar grows stronger. The single currency fell to 1.1206 euros per dollar, the lowest level since mid-June. Nevertheless, the markets estimate a 94% reduction in the rate by 25 basis points. It is necessary to carefully study the comments of the head of the Fed Jerome Powell on the results of his speech before Congress to determine whether traders will continue to reduce rates for a deep reduction in interest rates.
The lull in the trade dispute between the US and China after the G20 summit in Japan also strengthened the dollar. The situation has not deteriorated, and that is positive. The rising dollar pushed the British pound to a new six-month low of 1.2480 dollars, which is the lowest value after a sudden collapse on January 3, when the pound fell to 1.2409 dollars. The dollar is recovering, which means that there are some risks for the euro and the pound. On Wednesday, data on GDP and industrial production in the UK will be released, and on Thursday, the Bank of England will publish its financial stability report, which will help traders to assess the position of the regulator. Earlier, the head of the Bank of England Mark Carney said that the large-scale trade war and Brexit increase the risks for the British economy. This prompted investors to increase bets on an interest rate reduction.
