The US Dollar strengthened, reaching a two-week high of 98.5 on the dollar index. This movement occurred as investors awaited key US economic data, despite recent indicators suggesting a potential slowdown in economic momentum. The dollar gained primarily against the Swiss franc and the euro, although the euro received some support from lower-than-expected inflation figures in Germany and France. Market expectations currently anticipate two quarter-point rate cuts by the Fed this year.
- The dollar index reached 98.5, a two-week high.
- The ISM Manufacturing PMI fell below forecasts, indicating the sharpest contraction in the factory sector since 2024.
- The S&P Global Services PMI was revised lower, signaling weakness in the services sector.
- Richmond Fed President Barkin suggested monetary policy will require “finely tuned judgments.”
- Governor Miran indicated the Fed may need to cut interest rates by more than 50 basis points in 2026.
- Money markets are pricing in two quarter-point rate cuts by the Fed this year.
- The dollar strengthened against the Swiss franc and the euro.
- Lower-than-expected inflation in Germany and France provided some support to the euro.
The dollar’s recent performance reflects a complex interplay of factors. While economic data hints at potential weakening, the currency has shown resilience against certain counterparts. Fed commentary suggests a cautious approach to future policy decisions, with potential rate adjustments on the horizon. This environment creates uncertainty, but also opportunities for strategic positioning within the currency market.