Probability of Fed cutting rates in December has fallen sharply
The Dollar Index ended the overnight session with little change at 100.2 after going through a wildly fluctuating session that was based on the mixed US jobs report for the month of September. Nonfarm payrolls (NFP) for the month of September increased to 1196k, which was a significant rise over the 53k consensus; however, the figure for August was revised to minus 4k while the unemployment rate went up to a four-year maximum of 4.4% from 4.3%.
Furthermore, the release of the October jobs report, which is expected to show the negative effect of the government shutdown on employment, has now been rescheduled for December 16, after the FOMC meeting on December 10. The FOMC Minutes of the meeting held on October 28-29 revealed that the deep division within the Fed was one of the main reasons the futures market reduced the likelihood of a December rate cut to 35% from 92% since the last FOMC.
Profits from the dollar are at risk of being taken ahead of next week's Thanksgiving holiday-shortened trading week. The S&P 500 and Nasdaq Composite Index declined by 1.6% and 2.2%, respectively, overnight, as they could not get rid of the worries about AI stocks being overvalued, which had been persistent, amidst indications that investors are moving towards safety in Treasuries. US President Donald Trump may once again exert influence on the monetary policy.