Traders are now focusing on Federal Reserve Chairman Jerome Powell's speech early this morning, as well as the highly anticipated jobs report on Friday, for a clearer signal on the possibility of a December rate cut.
This week's economic data line is expected to provide important insights into the pattern of the US economy.
The latest labor market data showed an increase in the number of job vacancies in October and a decline in the rate of layoffs, reflecting resilience in hiring trends. However, these indicators may not be enough to fully reassure policymakers.
San Francisco Fed President Mary Daly emphasized the uncertainty by saying that while a December rate cut is still a possibility, it is not a certainty.
"Economic data in the coming days will likely shape our discussions," she said, illustrating the Fed's cautious but flexible approach in assessing the balance between growth risks and inflationary pressures.
For now, the market has pegged a roughly 70% chance of a 25 basis point rate cut.
Therefore, Powell's speech and labor market data will be closely watched to confirm or refute these expectations.
Meanwhile, investors are seen cautiously waiting for this important development before making their next move.
