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Market Analysis

US Dollar Index Rises Above 104.00 as Yields Recover, Awaiting ISM PMI
Amos Simanungkalit · 29.3K Views

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The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, recovers its intraday losses thanks to a rebound in US Treasury yields. During the Asian session on Thursday, the DXY trades around 104.10, with 2-year and 10-year yields on US Treasury bonds standing at 4.28% and 4.05%, respectively.

The US Dollar has faced pressure due to dovish sentiment surrounding the Federal Reserve’s (Fed) policy outlook. At its July meeting on Wednesday, the Fed decided to keep rates unchanged in the 5.25%-5.50% range.

Traders are now looking for further direction from upcoming US economic data, including the ISM Manufacturing PMI and weekly Initial Jobless Claims, scheduled for release later on Thursday. On Wednesday, data showed that US ADP Employment Change rose by 122,000 in July, with annual pay up 4.8% year-over-year. This followed a revised increase of 155,000 in June, falling short of the market expectation of 150,000.

During a press conference following the interest rate decision, Federal Reserve Chair Jerome Powell mentioned that a rate cut in September is "on the table," although the Federal Open Market Committee (FOMC) did not want to commit to anything in their statement. Powell added that the central bank would closely monitor the labor market and remain alert for any signs of a significant downturn, according to Reuters.

However, the FOMC indicated in its statement that it does not foresee cutting rates until there is greater confidence that inflation is sustainably heading toward 2%. They emphasized the need for more progress on inflation before considering a rate cut in September, unless a substantial decline in the labor market begins to outweigh the slow progress on inflation.

 

 

 

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

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