The Dollar hovered near a seven-week low on Tuesday as investors awaited US data revisions that might reveal a weaker-than-expected jobs market, reinforcing expectations for further Federal Reserve interest rate cuts.
The greenback fell 0.2% against the Japanese Yen to 147.21, while the British Pound rose 0.1% to $1.3558. The Euro slipped to $1.1752 after recently reaching its highest level since 24th July.
Furthermore, against a basket of currencies, the Dollar fell to 97.25, its lowest level since late July, ahead of the release of preliminary benchmark revisions for US jobs data covering April 2024 to March 2025, Reuters reports.
Economists expect a potential downward revision of up to 800,000 jobs, which could suggest that the Federal Reserve may be lagging in its efforts to reach maximum employment.
Traders are increasingly anticipating more aggressive Federal Reserve easing. Money markets have fully factored in a 25-basis point rate cut, while the probability of a larger 50-basis point reduction has risen to nearly 12%, according to CME’s FedWatch tool.
Current money market pricing reflects significant scepticism that the Fed will go for a 50-basis point cut, but meaningful revisions to the data could strengthen the argument for a larger reduction.
Advisors to the Trump administration are reportedly preparing a report highlighting the alleged flaws of the Bureau of Labor Statistics, which could be released in the coming weeks, according to The Wall Street Journal.
Rising expectations of Federal Reserve policy easing have also pushed the spot gold price to a record $3,659.10 per ounce on Tuesday.
Elsewhere, the Norwegian Krone gained roughly 0.2% against both the Dollar and the Euro after Norway’s minority Labour Party secured a second term on Monday.
Moreover, political events from Tokyo to Buenos Aires are expected to remain in the spotlight for investors, following the resignation of Japanese Prime Minister Shigeru Ishiba, the ousting of French Prime Minister François Bayrou, and the sudden dismissal of Indonesia’s finance minister in recent days.
Also, later this week, the European Central Bank (ECB) is broadly anticipated to maintain its current interest rates at Thursday’s policy meeting.
Last month, economists were divided over the chances of additional ECB rate cuts, but recent data, showing inflation near the 2% target and unemployment at a record low, has shifted sentiment.