– Monday, 16 February
Market conditions are subdued as the dollar index trades sideways near 97.00 due to holidays in the US and China. The dollar experienced pressure last week following benign US inflation data, reinforcing expectations of Federal Reserve rate cuts later in the year. Investors are now awaiting key economic data, including Fed minutes, Q4 GDP, and the core PCE price index, to gain further insights into the monetary outlook.
- The dollar index is holding just below 97.
- US markets were closed for the Presidents’ Day holiday.
- Benign US inflation data has increased expectations of Fed rate cuts.
- The annual headline inflation rate slowed to 2.4% last month.
- Markets are pricing in a Fed rate cut in July, with a strong probability of a move in June.
- Investors await Fed minutes, Q4 GDP, and the core PCE price index.
- The US Dollar Index has recovered small losses and is trading near 97.00.
- Trading volumes are likely to remain muted due to holidays.
The data suggests a period of relative stability for the dollar in the short term, influenced by holiday closures and anticipation of upcoming economic reports. Inflation data is impacting expectations for monetary policy, with potential interest rate cuts from the Federal Reserve weighing on the currency. The direction of the dollar will likely be determined by the release of key economic indicators and subsequent adjustments to rate cut expectations.