Market Analysis
The US Dollar Index (DXY), which tracks the value of the US Dollar (USD) against six major currencies, is trading sideways around 104.50 during early European hours on Wednesday. This stability comes amidst a decline in US Treasury yields, with the 2-year and 10-year bond yields at 4.44% and 4.24%, respectively.
The USD could face downward pressure as expectations for a Federal Reserve rate cut in September rise. Fed Chair Jerome Powell recently suggested that this year’s inflation data supports confidence that inflation will align with the Fed's target, hinting that rate cuts might be on the horizon.
According to CME Group’s FedWatch Tool, there is now a 93.6% chance of a 25-basis point rate cut at the September Fed meeting, up from 88.5% the previous day.
In parallel, investors are watching developments in the US presidential elections scheduled for November. Market analysts anticipate that Donald Trump may win despite strong support for Vice President Kamala Harris, who is leading the Democratic nomination race. NBC News reports that Harris has secured endorsements from over 1,992 delegates, surpassing the 1,976 delegate threshold needed for nomination.
Investors are also awaiting the release of the US Purchasing Managers Index (PMI) data later in the North American session. Additionally, attention will shift to the Gross Domestic Product (GDP) Annualized (Q2) figures, set for release on Thursday, which are expected to provide further insights into the US economic landscape.
Paraphrasing text from "FX Street" all rights reserved by the original author.