Dollar Weakens: Weak Data & China Issues Weigh
The US dollar index (DXY) remained under pressure on Tuesday (February 10th), sliding to the 96.8 area, down 0.2% after falling more than 1% in the previous two sessions. The market is seeing an increasingly clear message: recent US data signals a weaker-than-expected economy, fueling renewed speculation about a Fed interest rate cut.
The immediate trigger came from weaker-than-expected retail sales. Stagnant consumer spending in December reinforces the narrative that growth is cooling—making the argument that the "Fed needs to ease" increasingly plausible. For the dollar, this is usually an unenviable combination: weak data → potential yield decline → DXY followed suit.
In the currency market, expectations have also shifted. While a week ago the dominant scenario still pointed to two interest rate cuts in 2026, now the possibility of three cuts is starting to become more widely considered. But the market is not yet willing to go all-in, as the final decision will be largely determined by subsequent data—especially the upcoming employment and inflation reports.
Additional pressure comes from external factors: concerns have arisen about foreign interest in US assets, following reports that Chinese regulators are encouraging financial institutions to limit their holdings of US government bonds to reduce concentration risk and guard against uncertainty in US economic policy. If these diversification flows intensify, the dollar could find it increasingly difficult to find a foothold.
Source: Newsmaker.id
