Although the impact on the market was a bit late, the US dollar has returned to its track at the opening of the week with a significant decline.
Indicators on the United States (US) inflation figures published last week strengthened expectations that the Federal Reserve (Fed) will implement their first interest rate cut in more than 3 years.
The CME FedWatch indicator has started to show a change in the percentage of Fed rate cut expectations which is 62% for a 50 basis point cut while only 38% for a 25 basis point cut.
The US dollar is seen to tend to move weakly but analysts warned investors that the market situation will be volatile ahead of the FOMC meeting early Thursday morning.
This September's edition of the FOMC meeting has been long awaited by investors after speculation for a change in the Fed's monetary policy which was previously maintained, is expected to have a major impact on the market until the end of 2024.
Markets see a Fed interest rate cut if carried out at this latest meeting will prompt continued policy easing through the end of the year.
However, expectations can change based on the statement that will be delivered by Fed Chairman Jerome Powell later.
The possibility remains as the August NFP jobs report has started to show a recovery and better US economic growth in the second quarter.
In addition to the FOMC meeting, the Bank of England (BOE) and the Bank of Japan (BOJ) will also hold their policy meetings with the expectation that both will keep interest rates unchanged as before.
The market should also prepare for the release of important economic data throughout the week such as Canadian and UK inflation data and Australian employment data.
