United States Dollar Index rises to near 101.00 on Fed hikes this year
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is gaining ground after remaining unchanged in the previous day and trading around 101.00 during the Asian hours on Monday.
The Greenback holds steady as traders anticipate further Federal Reserve (Fed) interest rate hikes later this year. The currency's resilience persists despite easing global inflation pressures, which have been aided by a return to normal oil shipping volumes through the Strait of Hormuz.
The CME FedWatch tool shows financial markets are pricing in a 77.3% chance of Federal Reserve (Fed) interest rate hikes by year-end. Traders will likely observe the US Institute for Supply Management’s (ISM) Services Purchasing Managers’ Index (PMI) due later in the day. Traders will shift their focus toward Wednesday's release of the Fed’s June policy Meeting Minutes to gain clearer insights into the future path of interest rates.
However, the US Dollar may face challenges as labor market data released last week prompted markets to reduce bets on a September rate hike. Nonfarm Payrolls (NFP) showed only 57,000 jobs added last month, severely missing the market's forecast of 110,000. While the headline unemployment rate did manage an unexpected drop to 4.2% from May's 4.3%, the dramatic hiring slowdown strongly signals that the broader economy is cooling down.
Fed Chair Kevin Warsh reaffirmed last week the central bank’s independent commitment to its 2% price stability target. Notably, he also acknowledged that inflation risks and expectations have finally begun to moderate over the past month.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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