Market Analysis

The US Dollar Index (DXY) is trading within a narrow range around 104.30 during Thursday’s European session. The US Dollar (USD) remains subdued as investors await the release of the Q2 flash Gross Domestic Product (GDP) data, scheduled for 12:30 GMT. This data will provide insight into the current health of the economy.

Forecasts suggest that the US economy grew at an annualized rate of 2% in Q2, up from the previous rate of 1.4% and surpassing the Federal Reserve’s estimate of 1.8% non-inflationary growth. Investors will also scrutinize the GDP Price Index, which measures changes in the prices of goods and services produced. The index is expected to have slowed to 2.6% from the previous 3.1%, potentially alleviating concerns about persistent inflation.

In addition to the GDP figures, attention will be on the June US Durable Goods Orders. New Orders for Durable Goods are anticipated to rise by 0.3%, up from 0.1% in May.

The key focus for the US Dollar will be the Personal Consumption Expenditure (PCE) Price Index data for June, due out on Friday. The core PCE inflation, a preferred measure by the Federal Reserve, is projected to decrease to 2.5% from 2.6% in May, with a monthly growth of 0.1%. A decline in inflationary pressures could strengthen expectations for a Federal Reserve rate cut in September, while weaker data might undermine these expectations.

Market sentiment remains cautious amid growing uncertainty surrounding the US presidential elections. S&P 500 futures have given up earlier gains seen in Asian trading hours, and 10-year US Treasury yields have dropped to 4.24%.

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