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Dollar holds near 99.4 to 100.1 as September Fed hike bets fade
DBS says a widening US budget deficit and weaker fiscal position are undermining US bond yield support, keeping the DXY range-bound after softer US inflation and labor data.
A softer US CPI print and weaker labor data have helped keep the US dollar index, DXY, range-bound between 99.4 and 100.1, according to DBS Group Research economist Philip Wee as cited by FXStreet.
The dollar steadied after a USD/JPY sell-off that was linked to joint US and Japan interventions, while markets cut sharply the implied probability of a September Federal Reserve rate hike.
DBS also pointed to a wider US budget deficit and a weaker fiscal position as factors seen eroding the yield advantage of US government bonds, which in turn limits broader dollar support.
FXStreet added that market volatility is staying low, with thin liquidity potentially amplifying moves, while investors await further UK data that could influence GBP and related currency demand.
Latest closeUSD/JPY 159.42 ▲0.2%|Dollar index 99.99 ▲0.2%