The US Dollar is showing signs of strength, with the dollar index holding above 98.4 following two days of gains. Investors are keenly watching the upcoming PCE price index for further clues on the Federal Reserve’s monetary policy. Recent economic data, including lower jobless claims and revised GDP figures showing robust growth, suggest a resilient economy. While markets still expect a rate cut in October, expectations for the total amount of easing this year have slightly decreased.
- The dollar index held above 98.4 after two straight sessions of gains.
- Investors are awaiting the latest PCE price index.
- Weekly jobless claims dropped by 14K to 218K, below forecasts.
- Revised GDP figures pointed to 3.8% annualized growth in Q2.
- Markets still anticipate a quarter-point Fed cut in October.
- Expectations for total easing this year eased to 39 basis points.
- The dollar index is on track for a nearly 1% weekly gain.
The recent performance and economic indicators suggest a complex outlook for the US Dollar. The strength of the economy, indicated by strong growth and low unemployment, provides underlying support. However, the expectation of a near-term interest rate cut introduces a potential headwind. The dollar’s trajectory will likely depend on upcoming inflation data and how it influences the Federal Reserve’s decisions regarding monetary policy.