USD Weakens Below 99, Markets Await US Data
The US Dollar Index (DXY) announced its expected peak around 98.70 on Tuesday morning in Asia, below the psychological level of 99. Investors are awaiting the release of the US ISM Services PMI for further direction on the dollar's outlook.
Last Friday, the US employment report reported a gain of just 73,000 nonfarm payrolls in July, well below expectations of 110,000. Previous data was also revised sharply downward. The rate of decline edged up to 4.2%, and the US ISM Manufacturing PMI fell to 48.0. These data reinforce expectations that the Federal Reserve will begin cutting interest rates at its upcoming September meeting.
The market now rates an 84% chance of a 25-bps cut in September, with the prospect of a total reduction of nearly 60 bps by the end of the year, reflecting two possible tapering steps. Mary C. Daly, President of the San Francisco Fed, stated that the time for an interest rate cut is "near" given weak employment and persistently low inflation.
Additional pressure comes from concerns about the independence of the Federal Reserve, following the sudden resignation of Adriana Kugler, a member of the Fed's Board of Governors. Looking ahead, market attention is focused on the US ISM Services PMI, released today—if it rises above expectations of 51.5, it could potentially boost the dollar's appeal. (ayu)
Source: Newsmaker.id
