In European trading on Monday, the US Dollar (USD) experienced a decline, marking its first downward session in five against a basket of major currencies, as traders engaged in profit-taking activities after the currency reached a six-month high.
Market participants are now turning their attention to a series of pivotal US economic indicators that are poised to provide significant insights into the future trajectory of US monetary policies.
The Dollar Index
The Dollar Index exhibited a 0.5% decline, settling at 104.52, with the session’s peak registered at 105.06. This followed four consecutive sessions of gains last week, during which the index reached a six-month peak at 105.15.
For the entirety of the previous week, the Dollar Index recorded a commendable 0.75% ascent. This marked the eighth consecutive week of profit, constituting the lengthiest stretch of weekly gains since July 2014. These gains were predominantly attributed to speculations that the Federal Reserve would enact another interest rate hike before the year’s end.
Crucial Data on the Horizon
In the forthcoming week, a slew of pivotal US economic data releases loom on the horizon, encompassing figures related to consumer prices and producer prices. The outcome of these data points will wield considerable influence over the prospects of a potential interest rate hike by the United States.
US Interest Rate Outlook
Currently, the odds of a 0.25% interest rate hike by the Federal Reserve at the September meeting stand at a modest 7%. However, market pricing reflects greater confidence in a 0.25% US interest rate hike in November, with the probability standing at a more robust 45%.
