US dollar rallies, aided by its safe-haven status.
The US Dollar (USD) has started the week on a little higher note, reaching its highest levels in more than two weeks. Investors’ hopes for a Fed dovish turn later this week have been overshadowed by market concerns about growing hostilities in the Middle East.
Israel has initiated drone attacks in Lebanon in response to a deadly rocket attack in the Golan Heights this weekend. Raising fears of a full-fledged regional war involving Iran.
This week, a dovish turn by the Federal Reserve could stall the US dollar’s recovery.
The geopolitical concerns are overshadowing the basic agenda. Particularly Wednesday’s Federal Reserve (Fed) monetary policy meeting. The Fed is expected to leave interest rates constant. But investors anticipate a dovish shift in the bank’s tone, noting slowing inflation trends and hinting at a rate decrease in September.
Moreover Before that, the JOLTS Job Openings for June and the Conference Board’s Consumer Sentiment Index for July. Both due on Tuesday, are expected to show moderate declines, providing the foundation for the central bank’s dovish message.
Daily Market movers: US dollar rises on weak market mood.
In the absence of critical fundamental announcements on Monday. Market concerns over an escalation in the Middle East are likely to weigh risk appetite and give support. For the The US dollar is considered a safe haven currency.
Furthetmore On Tuesday, the US Conference Board’s Consumer Sentiment Index is predicted to fall moderately to 99.5 from 100.4 the previous month.
US JOLTS job openings are expected to fall to 8.03 million in June, down from 8.14 million in May.
According to the CME Group Fed Watch Tool, futures markets are pricing in only a 4.1% likelihood of the Fed cutting interest rates on Wednesday. With a 25 basis point rate decrease completely priced in September.
Moreover Data released this week revealed. That the US Personal Consumption Expenditures (PCE) Prices Index remained sticky in June. With the core PCE index at 2.6% year on year, keeping chances for a September rate cut alive.
Earlier in The US Gross Domestic Product (GDP) unexpectedly increased by 2.8% year on year in the second quarter, up from 1.4% in the first. But still far from the growth rates projected in the second half of 2023.
