U.S. Dollar Falls Amid Fed Rate Cut Speculation

(RTTNews) - The U.S. dollar weakened against other major currencies in the Asian session on Tuesday, as traders have already factored in a rate cut by the US Fed as a "certainty."

The Fed's monetary policy announcement is due on Wednesday, with the U.S. central bank widely expected to deliver a quarter point interest-rate cut following recent data showing relatively subdued inflation and a weakening labor market.

According to CME Group's FedWatch Tool, there is a slim 3.6 percent chance of a half-point rate cut.

Traders will pay close attention to the Fed's accompanying statement, guidance from the dot plot and Fed Chair Jerome Powell's post-meeting comments for clues about the likelihood of further rate cuts.

Currently, analysts expect the Fed to lower rates by another 25 basis points at both its October and December meetings, but Powell may say that future rate cuts will depend on incoming economic data.

Ahead of the rate-setting meeting, the U.S. Senate has confirmed President Donald Trump's nominee Stephen Miran as a Federal Reserve Governor Monday night.

In another significant development, a U.S. appeals court has ruled Lisa Cook can remain on the Federal Reserve board while her lawsuit proceeds.

Trading later in the day may also be impacted by reaction to reports on U.S. sales, industrial production and import and export prices.

In the Asian trading today, the U.S. dollar fell to near 2-1/2- month lows of 1.1800 against the euro and 1.3643 against the pound, from yesterday's closing quotes of 1.3601, respectively. If the greenback extends its downtrend, it is likely to find support 1.19 against the euro and 1.38 against the pound.

Against the Swiss franc and the yen, the greenback dropped to 1-week lows of 0.7917 and 146.70 from Monday's closing quotes of 0.7948 and 147.40, respectively. The greenback may test support near 0.78 against the franc and 145.00 against the yen.

The greenback slipped to nearly a 2-week low of 1.3762 against the Canadian dollar, from Monday's closing value of 1.3775. On the downside, 1.36 is seen as the next support level for the greenback.

Looking ahead, Germany ZEW economic sentiment index for September and Eurozone industrial production for July are due to be released in the European session.

In the New York session, Canada housing starts and CPI data for August, U.S. retail sales, export and import prices data, industrial and manufacturing productions data for August, business inventories for July, U.S. NAHB housing market index for September and U.S. Redbook reports are slated for release.