#DecemberRateCutForecast

The dollar is rising as the outlook for a rate cut remains uncertain.

The dollar rose to a three-month high against the euro on Monday, extending last week's gains amid doubts the Fed will cut interest rates this year.

The Fed cut interest rates by 25 basis points last week as expected, but Chairman Jerome Powell signaled the risk of making additional moves without a more robust economic outlook, signaling that this could be the central bank's last rate cut this year.

If not for the ongoing government shutdown in the US, data including the US nonfarm payrolls data scheduled for this week would have helped paint this picture.
With the government's announcement delayed again, investors will be left with the ADP employment data and ISM PMIs, but these are unlikely to make a significant difference.

‘A lot of doubt’ surrounding December rate cut

There was considerable doubt about the likelihood of a repeat rate cut in December.

Fed officials continued to offer competing perspectives on the state of the economy and the risks it faces on Monday, with this debate expected to intensify ahead of the Federal Reserve's next policy meeting.
Fed Governor Stephen Miran reiterated his rationale for deep interest rate cuts, which he has been making since joining the central bank's Board of Governors in September, during a television appearance.

Austan Goolsbee said he was cautious about further interest rate cuts as long as inflation remains significantly above the central bank's 2% target and is expected to accelerate through the rest of 2025.

"I've been watching the markets for years, and I don't recall such a wide divergence of opinion among Fed policymakers on the policy outlook," Osborne said.
Investors are now pricing in a roughly 70% probability of a 25 basis point rate cut in December. A week ago, that figure was around 94%.

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