US Dollar Index consolidates above 98.50 amid mixed US PMI signals
The US Dollar Index (DXY), which measures the value of the Greenback against a basket of six major currencies, is holding steady above the 98.50 mark, showing limited movement after Friday’s sharp drop. Despite last week’s setback, the DXY posted modest gains on Monday and is inching higher on Tuesday, last seen around 98.96, as market focus turned to fresh US Purchasing Managers Index (PMI) data released earlier in the session.
The data painted a mixed picture of the US services sector. The S&P Global Services PMI for July came in at 55.7, slightly beating expectations of 55.2, while the Composite PMI rose to 55.1 from 54.6, signaling continued resilience in private sector activity.
However, the ISM Services PMI disappointed, easing to 50.1 versus forecasts of 51.5, as new orders and employment components both softened. The Employment Index dropped to 46.4 from 47.2, signaling ongoing weakness in services hiring, while the New Orders Index fell to 50.3 from 51.3. Notably, the Prices Paid Index surged to 69.9, up sharply from 67.5, suggesting that cost pressures remain elevated despite slowing activity.
The index remains in consolidation mode after pulling back from a two-month high near 100.26, driven by a softer-than-expected US Nonfarm Payrolls (NFP) report that has all but cemented expectations that the Federal Reserve (Fed) will lower the interest rates at its next monetary policy meeting in September.
While the index briefly regained ground last week on trade optimism, it reversed sharply lower after the NFP report showed the economy added just 73,000, well below the consensus of over 110,000. Adding to the downside, job figures for May and June were revised down by a combined 258,000, deepening concerns about the labor market's momentum.
Source: FXstreet
