- US Dollar opens Tuesday with robust rebound.
- Fed officials maintain a cautious approach given mixed economic indicators.
- May’s PCE is the week’s highlight on Friday.
On Tuesday, the US Dollar, as portrayed by the Dollar Index (DXY), rose to 105.70 after opening the week on a soft note. A recovery in US yields appeared to overlook a slight dip in Consumer Sentiment data reported during the session.
From an economic perspective in the US, the picture continues to be mixed. A few signals of disinflation are noticeable, while most Federal Reserve (Fed) officials maintain a cautious approach.
Daily digest market movers: DXY shrugs off weak sentiment data on the back of hawkish bets
- On Tuesday, investors’ attention was drawn by the Conference Board’s Consumer Confidence Index. The figure slightly slipped to 100.4 from a revised 101.3 in May, indicating a somewhat tepid pace of consumer spending activity.
- Moving to Thursday, the Gross Domestic Product (GDP) revisions for the year are expected to remain at 1.3%.
- Friday will be a significant event as the May Personal Consumption Expenditures (PCE), a gauge of inflation favored by the Fed, is scheduled to be released.
- Both headline and core PCE are projected to ease to 2.6% YoY, down from 2.7% and 2.8%, respectively, in April.
- Expectations are high for a potential Fed rate cut in November, with a 70% probability of a cut happening as early as September.
- PCE data will play a crucial role in influencing market predictions.
Daily digest market movers: DXY shrugs off weak sentiment data on the back of hawkish bets
The technical outlook continues on a positive note, with indicators comfortably in the green. The Relative Strength Index (RSI) remains above 50 and trends upwards, while the Moving Average Convergence Divergence (MACD) is building green bars, suggesting a building of strength among bulls.
In addition, the DXY Index sustains its position above the 20, 100 and 200-day Simple Moving Averages (SMAs), which confirms an overall positive outlook.
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