TSX lower after index logs fresh record closing high
Investing.com - The U.S. dollar steadied around a mutli-week low on Tuesday, as investors assessed the prospect of an upcoming lowering in U.S. interest rates and uncertainty around the U.S. trade tariffs.
As of 04:39 EST (08:39 GMT), the U.S. dollar index, which measures the greenback against a basket of major currencies, traded 0.6% higher at 98.30, but was not far from a five-week low touched on Monday.
Elsewhere, the euro weakened against the dollar in the wake of fresh Eurozone inflation data, while sterling fell 1.0%.
U.S. jobs data looms large
Traders were awaiting Friday’s nonfarm payrolls report for August, which will be crucial to cement bets for a Federal Reserve rate cut this month. Traders see an 87% chance that the Fed will lower its benchmark rate by 25 basis points at the Sept. 16-17 meeting, according to CME FedWatch data.
Expectations were reinforced after Fed Chair Jerome Powell said at an economic symposium last month that policymakers were prepared to adjust policy if inflation continued to moderate and the labor market showed signs of cooling.
“Recall it was the July jobs report – and especially the 258,000 [of] downwards back month revisions – which reversed the July rally in the dollar and was the catalyst for Fed Chair Jerome Powell opening the door to a September rate cut,” ING analysts said in a note.
“Once again, expect a lot of focus on the back-month revisions, given that only 60% of survey respondents are answering within the first month,” they added.
Separately, a gauge of manufacturing sector activity is due out from the Institute for Supply Management on Tuesday, while will be followed by a metric of the key services segment later in the week. Manufacturing accounts for roughly 10% of U.S. output, while services makes more than two-thirds of activity in the world’s largest economy.
Elsewhere, the outcome of sweeping U.S. tariffs remains murky. Last week, U.S. appeals court last week ruled that most of President Donald Trump’s levies were illegal, possibly undermining his economic policy tool of using the duties in international negotiations. The court kept the tariffs in place until October 14 to allow the Trump administration time to appeal to the U.S. Supreme Court.
The impact of the tariffs has been a longstanding question for markets as well as Fed rate-setters. Despite ongoing calls from Trump to quickly slash rates, the Fed has so far this year stuck to a more cautious, "wait-and-see" approach before making any major policy decisions.
Trump has recently pursued the firing of Fed Governor Lisa Cook, raising expectations that the White House may be attempting to make appointments to the Fed’s rate-setting body who will advocate for swift rate reductions.
(Ayushman Ojha contributed reporting.)