DXY: May break above 101.00 again – DBS
28.08.2024, 11:17

DXY: May break above 101.00 again – DBS

The Dollar Index (DXY) depreciated 0.3% to 100.55, its weakest level since July 2023, and then rebounded back, DBS Senior FX Strategist Philip Wee notes.

Fed is inclined for a 25-bps rate cut

“While the US Treasury 10Y yield was barely changed at 3.82%, the 2Y yield eased 3.7 bps to 3.90%. Both the S&P 500 and Nasdaq Composite Indices rose by 0.16% each.  Fed officials are rallying around Fed Chair Jerome Powell’s call to lower interest rates in September. This Friday’s PCE deflator has become less relevant given the Fed’s priority to prevent further cooling of the US labor market.” 

“Although the Conference Board’s Consumer Confidence Index increased to 103.3 in August from an upwardly revised 101.9 in July, consumers showed more concern about the labor market. For example, the proportion of respondents who felt that jobs were ‘plentiful’ fell to 32.8% from 33.4%, while the share of those who reckoned jobs were ‘hard to get’ increased slightly to 16.4% from 16.3%.”

“However, the expectations index signaled less concerns of a recession ahead by pushing above 80 to 82.5 in August from an upwardly revised July to 81.1. Overall, the consumer survey supported the Fed’s inclination for a 25-bps rate cut vs. the market’s bet for a larger 50 bps move.”

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