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Economic Data Signals Weaker Dollar Outlook
Recent U.S. labor market data has reinforced expectations of multiple Fed rate cuts in 2024. The latest Nonfarm Payrolls (NFP) report showed job growth at 151,000 in February, falling short of the 160,000 forecast.
Additionally, January’s job numbers were revised downward to 125,000 from 143,000, raising concerns about weakening employment trends.
Market pricing now reflects expectations of 75 basis points (bps) of rate cuts this year, with the first move anticipated in June, according to LSEG data.
A deteriorating labor market could push the Fed to ease policy sooner than initially expected, increasing downside risks for the dollar.
Trade Policies Add to Dollar’s Weakness
In addition to monetary policy expectations, trade developments are influencing sentiment. Commerce Secretary Howard Lutnick confirmed that 25% tariffs on steel and aluminum imports will take effect on Wednesday, a move that has unsettled financial markets.
Meanwhile, President Trump referred to the U.S. economy as being in a “transition period,” raising investor concerns about the broader economic outlook. These uncertainties have contributed to sustained selling pressure on the dollar.
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