US Dollar Index Eases from 15-Month High
The US dollar index rose to 101.3 in Wednesday's trading, but has eased from its 15-month high of 101.6. The decline from the peak occurred after Federal Reserve Chairman Kevin Warsh stated that inflation risks have declined.
Warsh's statement was in line with a decline in the ISM Manufacturing price index, which was also influenced by weakening energy prices. This condition eased concerns that the Fed would need to raise interest rates several times this year. However, most market participants still expect some degree of monetary policy tightening.
ADP data also showed that the US private sector added nearly 100,000 jobs in June. This figure was slightly below market expectations, but still quite strong compared to this year's average, giving the Fed room to maintain a tight monetary policy if needed.
The US dollar also received support from Warsh's push to reduce the central bank's balance sheet. This policy could limit the supply of dollars and help reverse some of the pressure on the greenback that emerged earlier in the year.
On the other hand, the likelihood of a European Central Bank interest rate hike has begun to diminish after eurozone inflation showed signs of weakening. Meanwhile, Japan's looser fiscal stance has also put pressure on the yen, helping to maintain the US dollar's relatively strong position in the global currency market.
Source: Newsmaker.id
