Dollar Remains Under Pressure; CPI Next Key Factor
The US Dollar Index hovered around the 99.6 level during Monday's trading (August 10) following a sharp decline in the previous session. Pressure stemmed from US labor data that was significantly weaker than anticipated, dampening expectations for a near-term Federal Reserve interest rate hike.
July Nonfarm Payrolls unexpectedly fell by 23,000 jobs. Data for the preceding two months also underwent significant downward revisions, reinforcing signs that the US labor market is losing momentum after previously appearing robust.
Markets now estimate the probability of a 25-basis-point Fed rate hike in September at only around 44%, down from approximately 67% the previous week. This decline in expectations has weighed on bond yields and reduced the US dollar's appeal.
Investor focus has now shifted to US inflation data due for release this week. If the CPI indicates that price pressures are easing, the likelihood of a rate hike could diminish further, risking renewed weakness for the dollar.
However, developments in the Middle East remain a risk factor. Iran has denied holding direct talks with the United States and continues to demand the lifting of the naval blockade, the removal of sanctions, and compensation for war losses before an agreement can be reached.
Newsmaker Analysis: The dollar remains under pressure as the market perceives no urgent need for the Fed to raise interest rates. The 100 level on the DXY serves as a crucial psychological threshold. A lower-than-expected CPI could push the dollar lower and support gold prices, whereas a resurgence in inflation could revive rate-hike expectations and drive the dollar to strengthen again. (asd)*
Source: Newsmaker.id
