Federal Reserve Chairman Jerome Powell and the Federal Open Market Committee (FOMC) have observed a decrease in the projected Federal funds rate cuts for 2024, as per recent data. Last week, the projections stood at 100 basis points (bps), but this week they have dipped to 76 bps, mirroring the pre-Fed statistics.
This shift in projections comes as the FOMC continues to resist dovish pricing, while striving to keep options for rate hikes open. Despite these efforts, the likelihood of a rate hike at the upcoming meeting on January 31, 2024, is currently estimated at only 23%.
In correlation with these market movements, the EUR/USD exchange rate has plunged to its lowest level since the release of the last non-farm payrolls data. Simultaneously, US 2-year yields have surged past their levels at the time of the previous non-farm payrolls announcement.
These developments underscore an ongoing period of financial uncertainty and volatility. The Federal Reserve's decisions and data such as non-farm payrolls continue to significantly impact market expectations and currency exchange rates. The evolving situation will be closely monitored by investors and policy makers alike.
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