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Dollar eases on markets brace data fest

August 29, 2023 at 4:32 pm | Economic Affairs

Aug, 29(Agencies) — US dollar index eased 0.077% at 103.85 after slipping 0.2% on Monday against six key rivals. The index is up 2% this month as resilient economic data bolstered expectations that interest rates may stay higher for longer.
View gained more traction in the wake of Fed Chairman Jerome Powell on Friday suggesting that further rate increases may be needed to cool still-too-high inflation, though his promise to move with care at upcoming meetings provided for some uncertainty.
With US central bank highlighting the interest rate path will be heavily dependent on data, the spotlight will be on a batch of economic indicators this week, including payrolls and personal consumption expenditure.
First up is job openings figures for July later in the day. Economists polled by Reuters expect job openings to come in at 9.465 million, easing slightly from June.
Carol Kong, currency strategist at Commonwealth Bank of Australia, said stronger than expected jobs data could boost market pricing for another Fed rate hike and push up the dollar.
Markets are pricing in a 78% chance of the Fed standing pat on interest rates next month, CME FedWatch tool showed, but the odds of a hike in the November meeting is now at 62% compared with 42% a week earlier. “Our base case is that the Fed has completed its tightening cycle and will begin its easing cycle in March 2024,” CBA’s Kong said. “But Powell’s hawkish comments at Jackson Hole suggest the risks are skewed to more tightening and a later start to the easing cycle.”
Elsewhere, traders are keeping a watchful eye on any signs of a possible intervention from Japanese authorities as the yen wallows near a nine-month low against the dollar.

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