The USD Index (DXY) experienced further gains on Thursday, propelling the greenback to reach new multi-week highs in the 103.20 range.
Continuing its upward trajectory for the second consecutive session, the index aims to solidify its recent breakthrough of the 103.00 barrier, benefiting from a market environment that favors risk-off sentiment.
Simultaneously, the dollar’s upswing aligns with a modest recovery in US yields across various maturities. This resurgence came shortly after Federal Reserve Chair Powell’s remarks at the ECB Forum in Sintra on Wednesday, where he expressed optimism about the US economy, dismissing the likelihood of a recession and hinting at the potential for two consecutive interest rate hikes.
Current market indicators, specifically CME Group’s FedWatch Tool, suggest that the probability of a 25 basis points rate hike at the Federal Reserve’s meeting on July 26 exceeds 80%.
The upcoming US economic calendar includes the release of final Q1 GDP figures, followed by Initial Claims, Pending Home Sales data, and a speech by Atlanta Fed representative R. Bostic, who is a voting member in 2024 and known for his hawkish stance.
The USD Index continues its upward surge, extending the recovery for the week beyond the 103.00 hurdle on Thursday.
Furthermore, the likelihood of an additional 25 basis points rate hike during the Federal Reserve’s July meeting remains high. This expectation is supported by the sustained strength of vital US economic indicators such as employment and prices.
Federal Reserve Chair Powell’s comments during the June FOMC event further reinforced this view. He referred to the upcoming July meeting as a “live” event and signaled that the majority of the Committee is ready to resume the tightening campaign as early as next month.
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