Forex analytics. The dollar muddies the waters – ForexNews.PRO
Everything secret becomes clear. Perhaps Donald Trump is angry at the Fed for its unwillingness to cut rates, not because he wants to return America to a golden age. The president just invested money in stocks, and the decrease in the likelihood of monetary policy easing is dragging the S&P 500 down. Statistics on the US labor market for September raised the chances of a December monetary expansion only slightly, from 28% to 36%. This allowed the EURUSD to find its footing.
According to Cleveland Fed President Beth Hammack, lowering interest rates to support the labor market may prolong the period of inflation above the target level and increase financial stability risks. Loosening monetary policy allows investors to take on more risks. Financial conditions are becoming more favorable, and prices are rising.
Unfortunately, the September employment report did not answer the question of what the Fed would do. Non-farm payrolls accelerated to 119k. However, the figures for July-August were revised down by a total of 33,000, and unemployment rose from 4.3% to 4.4%.
Investors continue to puzzle over whether the labor market is too hot for monetary policy easing. Or is it too cold for the hawks to stop fearing high inflation? In my opinion, it’s still fragile, but not as ugly as many assume.
Perhaps the American administration was most pleased with the September employment statistics. According to the White House, the figures turned out to be better than expected, and new jobs were provided to US citizens. Salary will increase by $1,200 per average American in 2025. Difficulties certainly remain. The high inflation provoked by Joe Biden. Donald Trump won’t stop working until he solves this problem.
I wonder how? By reducing the rate? Turkish President Recep Erdogan followed this path a few years ago, forcing the central bank to loosen monetary policy, ostensibly to combat inflation-causing moneylenders. The result is a colossal price and currency crisis with a sharp depreciation of the lira.
However, as long as the Fed remains independent, the worst can be avoided. After the September employment report, the futures market slightly increased the chances of a federal funds rate cut in January, from 65% to 70%. This suggests that the scenario of a temporary strengthening of the US dollar with its subsequent weakness in the first half of 2026 remains basic. The only question is, when exactly to buy EURUSD? Now or a little later?
