Dollar Steady Above 97, Markets Await Fed Minutes
The dollar index held steady above 97 on Wednesday, after increased volatility in the previous session. Market participants are now holding positions while awaiting the minutes of the Federal Reserve's latest policy meeting for a clearer read on interest rate direction.
Investors' attention is also focused on Friday's release of the PCE Price Index, the Fed's preferred inflation indicator. Furthermore, gross domestic product (GDP) data, scheduled for release later this week, is expected to confirm that the economy has expanded for another quarter.
However, the monetary policy outlook remains shrouded in uncertainty. This comes after stronger-than-expected labor market data, while last week's inflation data was tame, creating mixed interpretations regarding the scope for an interest rate cut.
On Tuesday, Fed Governor Michael Barr stated that interest rates should be held steady for some time until officials have greater confidence that inflation is moving sustainably toward the central bank's 2% target. This statement reinforces the Fed's caution against changing policy too quickly.
Beyond economic factors, the market is also monitoring geopolitical developments. The United States and Iran reportedly reached an understanding on a number of "guiding principles" in the second round of indirect talks on the nuclear dispute, helping to ease tensions in the short term.
However, the source of uncertainty has not completely disappeared, as a comprehensive agreement is not expected anytime soon. With the Fed's minutes, PCE, and GDP data, combined with geopolitical dynamics, dollar movements are expected to remain sensitive to the direction of interest rate expectations and global risk sentiment. (asd)
Source: Newsmaker.id
