The US Dollar (USD) is struggling to maintain its positive momentum on Tuesday. As investors shift to riskier assets in the hopes that the US debt-ceiling deal would be finalized in the coming days.
The US Dollar Index, which had earlier reached a new multi-month high over 104.50. Was last seen trading in the negative region below 104.00. Meanwhile, US stock index futures are up 0.3% to 1.1%. Showing an improving market attitude.
The USD’s valuation is likely to be influenced by risk perception. Ahead of the release of highly anticipated labor market statistics later this week.
The Conference Board (CB) will issue the Consumer Confidence Index statistics for the second part of the day. More crucially the House Rules Committee will vote on the 99-page bill agreed upon by US President Joe Biden. And House Speaker Kevin McCarthy to suspend the debt ceiling before submitting it to the House floor for a final vote on Wednesday.
“The CB Consumer Confidence Index fell in April to 101.3 from 104.0 in March. And is expected to have shrunk further in May to 99.1. “The Expectations sub-component has remained below 80 since February 2022. A level usually associated with expectations of a recession within the next year.” In fact, the sub-index dropped to 68.1 in April from 74 the previous month. showing that people do not perceive the situation improving and continue to be concerned about worsening economic conditions.”
The US dollar loses strength on Tuesday, according to the daily market movers.
Following a three-day weekend, US Treasury bond rates began the week lower. The benchmark 10-year yield was last noted at 3.7%, down more than 1% on the day. Nonetheless, according to the CME Group Fed Watch Tool, markets are pricing in a less than 40% chance that the US Federal Reserve (Fed) will leave its policy rate steady in June.
US President Joe Biden and Republican House Speaker Kevin McCarthy reached an agreement on Sunday. To temporarily suspend the debt ceiling in order to prevent a US financial default. The accord, which will postpone the $31.4 trillion debt ceiling until January 1, 2025. Still has to be approved by the House and Senate in the following days.
The US Bureau of Economic Analysis (BEA) stated on Friday that annual inflation in the US jumped to 4.4% in April from 4.2% in March, as measured by the change in the Personal Consumption Expenditures (PCE) Price Index.
The annual Core PCE Price Index, the Fed’s preferred measure of inflation, increased to 4.6%, slightly higher than the market’s forecast of 4.6%.
According to the BEA’s release, Personal Income gained 0.4% on a monthly basis, while Personal Spending increased 0.8%.
On Friday, Cleveland Fed President Loretta Mester told CNBC. That the PCE Price Index figures highlight the moderate pace of inflation. “It’s critical for the Fed not to tighten monetary policy too much,” Mester noted.
The ADP will reveal the private data on Thursday. Advance of the May Nonfarm Payrolls (NFP) statistics from the US Bureau of Labor Statistics on Friday.
