Why Is The US Dollar On Fire Despite Fed’s Steady Interest Rate Signals?

Additionally, the US ISM Manufacturing PMI also impressed the US Dollar buyers with the 47.6 figures versus analysts’ estimation of 47.0 versus 46.4 previous readings. The greenback decisively crossed both its 50 and 200-day moving averages in the past month, with the 200-day average offering solid support throughout. While reduced rate hike expectations might appear to undermine the dollar, it’s crucial to consider its performance relative to other currencies. Two notable Fed speakers stepped into the spotlight on Tuesday, shedding light on their outlook for interest rates. The benchmark 10-year Treasury yield settled at 4.267%—its fourth-highest settle of the year, according to Dow Jones Market Data—after closing Friday at around 4.17%. A private gauge showed the slowest expansion in China’s services output in eight months on Tuesday.

Moving on, a light calendar and the US holiday may allow the DXY bulls to take a breather but the risk catalysts and Wednesday’s US ISM Services PMI will be the key to watch for clear directions. The Shanghai Composite Index retreated nearly 1% and Hong Kong’s Hang Seng Index lost over 2%. Elsewhere, Japan’s Nikkei 225 advanced slightly and Europe’s Stoxx Europe 600 wavered. The S&P 500, Dow industrials and Nasdaq all moved lower, with the Dow off nearly 200 points. The US dollar has consolidated after the latest economic report suggested the Fed’s work may be coming to an end.The US dollar has consolidated after the latest economic report suggested the Fed’s work may be coming to an end.

Latest US Dollar Index Analysis

Beijing has put forward additional stimulus measures in recent days, including support for China’s ailing property sector and the creation of a government body to help the private sector. Follow the rate of the US Dollar Index (DXY) in real-time at Capital.com to spot the best trading opportunities. Over the last few months especially, there’s been a lot of focus in the world of Currency Trading upon the state of the US Dollar. No matter what your opinion is of the Greenback, it is still, without question, regarded as the world’s primary reserve currency and holds its weight of recognition across the board.

Following a quiet Asian session, Gold price retreated to the $1,920 area in the second half of the day. Following the upbeat ISM Services PMI data from the US, the 10-year US Treasury bond yield rose toward 4.3%, causing XAU/USD to push lower. The consumer-price index is expected to show inflation pressures remained fairly flat at a 3.3% year-on-year increase.The consumer-price index is expected to show inflation pressures remained fairly flat at a 3.3% year-on-year increase.

While this surge may suggest imminent rate hikes, the latest Federal Reserve signals and economic data actually tell a different tale. By moving the start and end of the timeframe in the bottom panel you can see both the current and the historical price movements of the instrument. In addition, you have an opportunity to choose the type of display of the US Dollar Index live chart – Candles or Lines chart – through the buttons in the upper left corner of the chart. All clients that have not yet decided which instrument to trade are in the right place since reading the full characteristics of the USDIDX and watching its performance on the charts will help them to make their final decision. At the end of 2019, the DXY traded at 96.5, meaning that the US dollar has slightly depreciated versus the basket of currencies since its establishment in 1973.

US Dollar Index Streaming Chart

If the beleaguered euro and yen did not have enough to worry about already, they now have to cope with Brent oil trading above $90/bl as the Saudis extend their supply cuts through… (Reuters) – The U.S. services sector unexpectedly gained steam in August, with new orders firming and businesses paying higher prices for inputs — potential signs of… The greenback posts five winning days in a row, boosted by possible inflation resurgence.Another day, another dollar gain. The greenback posts five winning days in a row, boosted by possible inflation resurgence.

The greenback was seen sprinting against other major currencies as jobs data on Friday is expected to show a cooling labor market.The greenback was seen sprinting against other major currencies as jobs data on Friday is expected to show a cooling labor market. Elsewhere, China’s central bank, namely the People’s Bank of China (PBoC), announced a heavy cut to its foreign exchange reserve requirement ratio (FX RRR) to 4% from 6.0% effective from September 15. That said, a slew of China banks cut interest rates on Yuan deposits to ease the pressure from lower mortgage rates announced previously.

Dollar Index Futures Discussions

The US Dollar Index was introduced by the US Federal Reserve in 1973 after the dismantling of the Bretton Woods Agreement. The constituents of the foreign currency basket were altered only once when several European currencies were subsumed by the euro in early 1999. When I write the Online Trading Academy Forex newsletter, I give my opinion about what I believe is happening to the currencies of the world based on the news I hear, the experts I follow, and my personal experiences of the economic cycles I have seen in the past.

The US Dollar Index (DXY) serves as a benchmark for measuring the relative value of the American dollar to a basket of currencies of the US’s key trading partners. Data are provided ‘as is’ for informational purposes only and are Forex arbitrage not intended for trading purposes. Against this backdrop, the benchmark US 10-year Treasury bond yields have been declining in the last two consecutive weeks after rising to the highest levels since 2007, to 4.18% at the latest.

Global currency markets and equity indices are reacting to the recent surge in oil prices and bond yields, with implications for inflation rates, according to reports from… Presently, the DXY represents a weighted geometric mean of the USD’s value to the exchange rates of the world’s six major currencies, namely the euro, British pound, Canadian dollar, Swiss franc, Swedish krona and Japanese yen. The euro holds the most weight versus the dollar in the index, making up about 57.6 per cent of the weighting, followed by the yen with around 13.6 per cent.

The US Dollar Index

Among them, ICBC, China Industrial Bank, Agricultural Bank of China and Bank of China (BoC) gained major attention. Additionally, Reuters cited four people familiar with the matter to report that China is likely to step up action to revive the country’s property sector. Loretta Mester, president of the Federal Reserve Bank of Cleveland and a non-voting member in 2023, emphasized there’s more work to be done, particularly in tackling stubborn service inflation. Mester, known for her hawkish stance, pointed to unexpected demand strength that could necessitate a more restrictive policy. She also noted the recent surge in oil prices, which could fan the flames of inflation again.

This fundamental information helps me understand what reports and indicators the economists of the world believe will shape future events. Since you’ve just unblocked this person, you must wait 48 hours before renewing the block. The S&P 500 is poised to challenge a crucial resistance level later this week
Last week’s labor market data was mixed, with some indicators suggesting that the economy is… The Fed convenes later this week and the markets are already pricing in a 25bps rate lift to cool inflation further.The Fed convenes later this week and the markets are already pricing in a 25bps rate lift to cool inflation further. A flurry of economic reports churned out last week injected much-needed volatility in forex dealmaking.A flurry of economic reports churned out last week injected much-needed volatility in forex dealmaking.

Nifty up for fourth consecutive day even as crude prices rise

Despite the dollar’s ascent, Fed futures are singing a different tune, with a 95% probability that the Fed will keep rates unchanged at the upcoming FOMC meeting. They continue to indicate traders bet on rates to stay on hold at about a 60% probability, according to CME Group. U.S. stocks finished Tuesday lower after Chinese data pointed to a slowdown in services activity, fueling concerns about global growth. Investing.com– Most Asian currencies fell on Wednesday, hit by persistent concerns over slowing economic growth and high oil prices, while the dollar surged to six-month highs… A few macroeconomic factors have a significant impact on the US Dollar Index price. These include, among others, inflation and deflation in the US dollar and foreign currencies included in the comparable basket, as well as economic growth and recessions in the respective countries.

• His sentiment echoed Fed Chair Jerome Powell’s words from the Jackson Hole Symposium in August.
• The DXY Index is often used by traders to monitor the value of the USD in comparison to a basket of select currencies in a single transaction.
• Global currency markets and equity indices are reacting to the recent surge in oil prices and bond yields, with implications for inflation rates, according to reports from…
• The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

The author has not received compensation for writing this article, other than from FXStreet. About inflation, Fed’s Mester acknowledged that progress has been made but noted it remains elevated. Fed Gov. Christopher Waller, a voting member of the FOMC, hinted the Fed can afford to “proceed carefully” in light of recent positive economic data. His sentiment echoed Fed Chair Jerome Powell’s words from the Jackson Hole Symposium in August. Waller’s cautiously optimistic tone suggests that the Fed may adopt a wait-and-see approach, especially with two consecutive favorable inflation reports. The U.S. dollar is currently on an eight-week winning streak, flexing its muscles to reach levels not seen since February 2023.

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China President Xi Jinping showed readiness for more collaboration with the international players of the services industry after US Commerce Secretary Gina Raimondo warned China as she returned from her trip to Beijing. On the same line, US President Joe Biden also crossed wires during the weekend while showing his disappointment with Chinese President Xi Jinping’s decision to remain https://investmentsanalysis.info/ absent from the summit of G20 leaders in India. On Friday, the headlines US Nonfarm Payrolls (NFP) rose to 187K in August versus 170K expected and 157K prior (revised) even as the Unemployment Rate marked an uptick to 3.8% from 3.5% market forecasts and previous readings. Further, the Average Hourly Earnings also eased to 0.2% and 4.3% compared to 0.4% and 4.4% respective priors.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Get smarter about markets with our free morning and evening newsletters, delivered every weekday. This page includes full information about the US Dollar Index, including the US Dollar Index live chart and dynamics on the chart by choosing any of 8 available time frames. Always stay on top of the latest price developments with our DXY live chart.

The DXY Index is often used by traders to monitor the value of the USD in comparison to a basket of select currencies in a single transaction. It also allows them to hedge their bets against any risks with respect to the dollar. The US Dollar Index spot price increases when the USD exchange rate strengthens its position in comparison to other currencies.