US Dollar, as measured by the DXY index, is approaching 106.00.
The US Dollar (USD) fell to 106.00 on Monday, according to the DXY Index, which measures the value of the USD against a basket of world currencies. The USD’s weakness was caused by risk-on flows, making it difficult to gather demand. Because the economic calendar had nothing noteworthy to offer on Monday, investors’ attention is now focused on the highlights for the rest of the week, which include Federal Reserve will make an interest rate decision on Wednesday, and nonfarm payrolls will be released on Friday. Both occurrences have the potential to have an additional impact on the USD price dynamics.
The market has almost priced in a halt in the Fed’s meeting on Wednesday.
The US economy is holding up well, which has helped the USD find further demand in recent sessions. Despite this, the likelihood of a 25 basis point raise in December, as indicated by data from the CME Group FedWatch tool, remains modest, impeding any significant strengthening of the USD. Before Wednesday’s meeting, a pause was mostly priced in, but markets will closely monitor Fed Chair Jerome Powell’s posture and forecast to continue betting on the Fed’s next moves.
Market Movers: US Dollar falls ahead of Fed decision, labor market data
The USD DXY is a currency. The index fell to 106.10, a 0.40% drop on the day.
As buyers take profits, the US Dollar struggles to maintain the traction achieved last week.
Investors are still studying high-level economic indicators released last week in advance of the Fed’s announcement on Wednesday.
The US Bureau of Economic Analysis stated on Friday that the September Personal Consumption Expenditures (PCE) Price Index met forecasts. It came in at 3.4% year on year, as expected, and was consistent with its previous reading of 3.4%. Core PCE fell 3.7% year on year.
The US Bureau of Economic Analysis said on Thursday that preliminary GDP estimates for the third quarter exceeded expectations. The headline result indicated annualised growth of 4.9%, exceeding the consensus forecast of 4.2%.accelerating from 2.1% growth in Q2.
Meanwhile, US Treasury yields are increasing. The 2-year rate increased to 5.05%, while the 5- and 10-year rates increased to 4.83% and 4.91%, respectively. This could help to limit the Greenback’s losses.
According to the CME Group FedWatch Tool, the probability of a 25 basis point raise in December remain modest, around 20%, ahead of the Fed’s decision on Wednesday.
