Market Analysis

The US Dollar Index (DXY), which gauges the value of the US Dollar (USD) against six other major currencies, dipped slightly to around 104.20 during early European trading hours on Monday after two consecutive days of gains.

Dovish expectations regarding the Federal Reserve's policy are exerting downward pressure on the Greenback. According to CME Group’s FedWatch Tool, there is now a 91.7% probability of a 25-basis point rate cut at the September Fed meeting, up from 90.3% a week ago.

US President Joe Biden withdrew his re-election bid on Sunday amid increasing pressure from fellow Democrats and endorsed Vice President Kamala Harris as the party’s candidate to challenge Republican Donald Trump in the upcoming November election, as reported by Reuters.

Read this article: US President Joe Biden stands down from reelection, endorses Kamala Harris

John Williams, President of the Federal Reserve Bank of New York, remarked on Friday that the long-term trends responsible for declines in neutral interest rates before the pandemic remain unchanged. Williams stated, "My own Holston-Laubach-Williams estimates for r-star in the United States, Canada, and the Euro area are about the same level as they were before the pandemic," according to Bloomberg.

Earlier this week, Fed Chair Jerome Powell commented that the three US inflation readings of this year "add somewhat to confidence" that inflation is on track to meet the Fed’s target sustainably, implying that interest rate cuts may be approaching.

Traders are now looking ahead to the release of Global Purchasing Managers Index (PMI) and Gross Domestic Product (GDP) data later this week for new insights into the economic conditions in the United States.

Paraphrasing text from "Reuters" all rights reserved by the original author.