Will the Fed cut interest rates tomorrow? 🤔Markets are buzzing with anticipation, and the US dollar is already feeling the impact. This week is shaping up to be a busy one with key data from the UK and Canada, plus a major political announcement. Get the full rundown on what's driving the markets in our latest blog below:
Key Takeaway’s:
- The U.S. dollar dipped today as market predictions for a 0.25% rate cut tomorrow gained momentum.
- New data on average earnings in the UK were released, aligning with economists' forecasts.
- Canada's inflation report is due out before the Bank of Canada's interest rate decision tomorrow
Market Recap
US Dollar and the Federal Reserve
The US dollar lost some ground on Monday. This was driven by a growing consensus in the market that the Federal Reserve will announce a 0.25% interest rate cut tomorrow. With little other major economic news to influence the market, traders' expectations for this policy shift were the primary factor affecting the dollar's value.
Australian Dollar on the Rise
The Australian dollar continued its positive trend, reaching its highest level since July against the US dollar. This upward movement was supported by the weaker USD, strong performance in commodity markets, and ongoing positive momentum in Chinese equities.
Euro Under Pressure
The euro saw a modest decline. This followed Fitch's decision on Friday to downgrade France's credit rating amidst the country's political uncertainty. While the immediate currency reaction was limited, concerns about France's fiscal outlook and the upcoming 2026 budget could continue to weigh on the euro in the near future.
British Pound's Strength
The British pound benefited from the market movements, climbing to its strongest level against the US dollar since July.
Today's Overview:
Anticipation for a Fed Rate Cut
The financial markets remained calm yesterday with little new economic data to drive significant changes. The US dollar eased slightly as investors continued to bet on a 0.25% interest rate cut from the Federal Reserve tomorrow. This is a key event to watch, as a rate cut would make borrowing cheaper for consumers and businesses, potentially stimulating economic activity but also impacting the dollar's value. Retail sales data, released later today, will be closely watched for any new clues on the health of the US consumer.
UK and Canadian Economic Indicators
UK Earnings: The UK's average earnings index was released this morning and came in as expected at 4.7%. This data is important because it shows how quickly wages are rising. The fact that wage growth continues to outpace inflation (the rate at which prices are rising) is a positive sign for the UK economy. Looking ahead, the focus will be on tomorrow's inflation (CPI) figures, which will heavily influence the Bank of England's interest rate decision on Thursday.
Canadian CPI: Canada's inflation report is also scheduled for this afternoon, and it's a critical piece of information for the Bank of Canada ahead of its own interest rate decision tomorrow.
Headline News: A New UK-US Partnership
In a significant political development, headlines are focusing on President Trump's state visit to the UK. A new technology partnership is expected to be announced, following a meeting between Prime Minister Starmer and tech CEOs at Chequers on Thursday. This signals a deepening economic relationship between the two countries in the tech sector.
16th September 2025
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