• US Dollar recovers ground after mixed August Nonfarm Payrolls data.
• Fed official downplayed discussions of a larger rate cut in September than 25 bps.
• Markets are seeing 40% odds of a 50 bps cut in the next Fed meeting.

The US Dollar Index (DXY), a measure of the US Dollar against a basket of six currencies, recovered its footing on Friday after the release of August Nonfarm Payrolls (NFP) data came in mixed. Following the data, the probabilities of the Federal Reserve (Fed) implementing a 50 bps rate cut in September remains high, but Fed officials might not embrace it yet.

Despite positive economic indicators, the market may be exaggerating its expectations for aggressive monetary policy easing. The current growth rate exceeds the long-term trend, signaling that markets may be overestimating the need for such measures. However, a 25 bps cut is a done deal.