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US Dollar Index trades in 98.5 to 99.0 range after yield-linked dip
DBS says bets for a September 16 Fed hike have eased to 38% from 72% late July, as traders look to upcoming US PCE and the Jackson Hole speech.
DBS Group Research economist Philip Wee said the US Dollar Index, or DXY, has settled back into a tight 98.5 to 99.0 range after a sell-off that was linked to higher US long bond yields.
Wee noted that the DXY recovery stalled slightly above 99 and only briefly held there, with the US Treasury 30Y yield falling by 5.9 bps to 5.165% overnight, extending a 4.6 bps decline from Monday.
He pointed to softer US data and a reduction in expectations for a September Fed hike, with market odds for a September 16 increase receding to 38% from 72% at the end of July.
Looking ahead, Wee said focus is on July PCE inflation data, expected to show headline PCE easing to 3.6% year over year and core PCE steady at 3.3%, plus Fed Chairman Kevin Warsh’s Jackson Hole keynote as the key event for the week.
Latest closeDollar index 99.64 ▼0.3%