Dollar Holds Ground Despite Rate Cut Speculations

The U.S. dollar remains strong against major currencies, impacted by economic data that complicate Federal Reserve rate cut plans. Consumer spending rose, slightly higher than expected, challenging traders' expectations. The Richmond Federal Reserve President anticipates limited risks in unemployment or inflation, impacting interest rate discussions.

The U.S. dollar showed resilience against major currencies, maintaining its trajectory toward a second consecutive week of gains despite a minor dip on Friday. This steadiness follows recent data indicating U.S. economic robustness, adding complexity to the Federal Reserve's potential interest rate cuts.

U.S. consumer spending, which is over two-thirds of the nation's economic activity, increased by 0.6% in August, slightly above the projections. Concurrently, the Personal Consumption Expenditures Price Index met expectations with a 0.3% rise, further impacting the dollar's strength.

Richmond Federal Reserve President Thomas Barkin highlighted the controlled risk of an upsurge in unemployment or inflation, allowing the central bank room to balance its policies while considering rate adjustments. Traders now foresee an 85.5% probability of a rate cut in the upcoming Fed meeting, a decrease from the previous week's 92% likelihood.

(With inputs from agencies.)