The US dollar weakened today following a larger-than-expected interest rate cut by the Federal Reserve, which reduced rates by 50 basis points last week. Consumer spending in the US rose by 0.2% in August, slightly below the anticipated 0.3%, suggesting the economy maintains some momentum.
The dollar index fell by 0.17% to 100.43, marking its lowest point since July 20, 2023, while the euro dipped to $1.116. The dollar is on track for its fourth consecutive weekly decline, down approximately 0.2% this week. Market expectations are now leaning towards a further 25 basis point cut in the upcoming November Fed meeting, with a 56.7% likelihood of another 50 basis point reduction.
In Japan, the yen gained strength after Yoshihide Suga narrowly won the leadership contest for the ruling Liberal Democratic Party. The yen appreciated by 1.88% to 142.12 per dollar, its largest daily gain since August 2. This shift in leadership was unexpected, as many analysts had anticipated a victory for a candidate favoring looser monetary policies.
Meanwhile, European inflation data from France and Spain came in lower than expected, increasing speculation for an October rate cut from the European Central Bank. In China, the central bank has implemented new stimulus measures, including interest rate cuts, to support economic growth.