Greenback extends its rebound to near 106.70.
Fed’s hawkish stance, risk-off sentiment support Greenback demand.
Fed officials emphasize caution in rate cuts due to economic data, inflation risks.
The US Dollar Index (DXY), which measures the value of the USD against a basket of currencies, has traded with solid gains, rising to 106.70. The DXY’s upward trajectory is driven by factors such as recent strong economic data, rising yields, and a less dovish stance from the Federal Reserve (Fed).
Factors driving its strength include geopolitical tensions, cautious Fed rhetoric on interest rates, and solid US economic data. The uptrend remains intact, supported by the economy’s resilience and limited expectations of aggressive Fed easing. That being said, after the index reached yearly highs around 107.00, a pullback or a period of consolidation is possible.
Daily digest market movers: US Dollar advances as markets adjust bets on Fed cuts
The DXY’s rise is driven by favorable data, rising yields, and the market’s cooling dovish Fed bets.
Last week, Powell downplayed the need for aggressive easing, emphasizing the economy’s strength. He suggested slowing the pace of rate cuts to increase chances of achieving the right balance
Other Fed officials align with Powell’s cautious approach, highlighting the need to consider both inflation and employment.
Market odds of a December rate cut have fallen toward 58%, according to the CME FedWatch Tool, indicating a shift in expectations.
For the rest of the week, markets will look upon weekly Initial Jobless Claims data, as well as S&P PMIs figures on Friday
