11/10/2024 Daily Reports
The U.S. dollar slipped from its two-month highs on Friday following labor market data showing signs of weakness, bolstering the case for quicker Federal Reserve rate cuts. However, the dollar remained on track for a second consecutive weekly gain, buoyed by stronger-than-expected payrolls data earlier this month, which led traders to dial back expectations of a half-point rate cut at the Fed’s next meeting.
Thursday’s rise in jobless claims complicated the outlook, especially after the same day’s consumer price index (CPI) uptick suggested that more restrictive monetary policy may still be necessary to control inflation. Currently, markets are pricing in an 83.3% chance of a quarter-point rate cut in November, up from 80.3% the previous day. Last week, odds of a larger half-point cut were at 32.1%.
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Will Rising Inflation and Jobless Claims Shape the Next Fed Move? Find Out What’s Coming Next!
Wall Street’s main indexes closed lower on Thursday as investors reacted to higher-than-expected inflation and unemployment claims. The Consumer Price Index (CPI) for September rose 0.2% monthly and 2.4% annually, slightly above economists’ estimates. Core inflation, excluding food and energy, increased 3.3% year-over-year, surpassing predictions of 3.2%. Additionally, weekly jobless claims climbed to 258,000, higher than the expected 230,000, signaling a potential slowdown in the labor market.
These mixed signals left investors uncertain, as inflation appeared hotter than expected while the labor market showed signs of weakness. As a result, traders estimated an 80% chance that the Federal Reserve would cut rates by 25 basis points in November. Some Fed officials, including Raphael Bostic, expressed comfort with holding rates steady, while others, like Austan Goolsbee and John Williams, acknowledged the likelihood of gradual rate cuts in the future.
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