Dollar hits 14-month low against euro, yuan dips
dollar hit a 14-month low against the euro on Wednesday as traders bet that the Federal Reserve will make another large rate cut at its November meeting on weakening labor optimism, while the yuan eased on growing doubts about the impact of a new round of Chinese stimulus.
The greenback tumbled on Tuesday after data showed that U.S. consumer confidence dropped by the most in three years in September amid mounting fears over the labor market.
«The narrowing in the labor market differential, which is sort of indicative of demand and supply conditions in the employment market was a very bad omen for the U.S. economy,» said Karl Schamotta, chief market strategist at Corpay in Toronto.
«Markets are interpreting this as a sign that the Federal Reserve is very likely to deliver a second emergency sized cut at its November meeting,» he added.
Traders are now pricing in 59% odds of a 50-basis point cut at the Fed's Nov. 7 meeting, up from 37% a week ago, and a 41% chance of a 25 basis point reduction, according to the CME Group's FedWatch Tool.
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