DXY Nears 100; Markets Await CPI Surprise
The US Dollar Index (DXY) edged up to around 99.7 during Monday's trading (Aug 10), following a 0.4% decline last week that saw it touch a two-month low. Markets are now shifting their focus to US inflation data due for release this week.
Sentiment toward the dollar remains influenced by US labor data that came in weaker than expected. Friday's Non-Farm Payrolls (NFP) report caused the probability of a Federal Reserve rate hike in September to drop to approximately 46%, down from around 64% the previous week.
Markets currently see a roughly 54% chance that the Fed will hold interest rates steady. Consequently, the Consumer Price Index (CPI) data is crucial in determining whether inflationary pressure remains strong enough to prompt the Fed to adopt a hawkish stance once more.
Investors are also keeping a close watch on developments in the Middle East and discussions regarding the reopening of the Strait of Hormuz. However, a near-term agreement between the US and Iran appears unlikely.
The dollar is also showing signs of strengthening against the yen. The Japanese currency has begun to relinquish some of the gains made following earlier interventions, though it remains significantly stronger than the multi-decade lows touched late last month.
Newsmaker Analysis: The DXY remains in a consolidation phase below the 100 mark. A higher-than-expected CPI reading could revive the likelihood of a rate hike and drive the dollar higher. Conversely, cooling inflation could weigh on the dollar again while providing support for gold and other major currencies. (arl)
Source: Newsmaker.id
