DXY: May pullback below 99.58 short term – DBS
|Fed cut expectations sent the DXY Index to 100.72 last Friday, near December’s 100.62 low, but was still above the 99.58 low in July 2023, DBS Senior FX Strategist Philip Wee notes.
Still above the 99.58 low in July 2023
“Fed Chair Jerome Powell announced at Jackson Hole that the time has come to adjust monetary policy. Powell was crystal about the Fed’s shift from pulling down inflation from its peak towards preventing a further cooling in the labour market, adding that the Fed had ample room to respond to any risks here.”
“In the short term, the oversold DXY could consolidate on surprises in this week’s US data, especially the PCE deflator on August 30, pushing back the futures market’s bet for a 50 bps cut. However, we will assess the DXY’s prospects to trade below 100 over the medium term. The US monthly jobs report on September 6 will be critical.”
“Apart from the telegraphed rate cut in September, the Fed’s revisions to the Summary of Economic Projections will be significant. In June, the Fed projected 1-2 rate cuts in 2H24, followed by 200 bps of cuts over 2025-2026.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.