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    US Dollar Index weakens on US Treasury yields, trades around 104.10

    Source Fxstreet
    Feb 7, 2024 06:01
    • US Dollar Index loses ground on downbeat US bond yields.
    • Fed’s Powell tempered expectations of a rate cut in March.
    • Fed Bank of Cleveland President Loretta Mester stated that the US central bank could consider interest rate cuts later in the year.

    US Dollar Index (DXY), measures the value of the US Dollar (USD) against the six other major currencies, extends its losses for the second straight session. The DXY remains in negative territory after trimming some of its intraday losses, hovering around 104.10 during the Asian session.

    Federal Reserve (Fed) Chair Jerome Powell tempered expectations of a rate cut and stressed the significance of closely monitoring inflation as it approaches the 2% core target. Despite these remarks, the US Dollar is weakened by the prevailing sentiment in the US bond market, which is impacting its performance despite the Federal Reserve's (Fed) cautious stance on monetary policy. The 2-year and 10-year yields on US bond notes stand at 4.39% and 4.02%, respectively, by the press time.

    On Monday, the US Dollar witnessed a significant surge in response to strong ISM Services data for January. The ISM Services Purchasing Managers' Index (PMI) surpassed expectations, reaching 53.4, which exceeded both the consensus figure of 52.0 and the previous month's reading of 50.5. Furthermore, there was an improvement in the ISM Services Employment Index, rising to 50.5 from the previous reading of 43.8.

    Furthermore, Fed Bank of Cleveland President Loretta Mester stated on Tuesday that the US central bank could entertain the idea of reducing interest rates later in the year. However, she warned against rushing into such a decision. Additionally, Fed Bank of Philadelphia President Patrick Harker expressed his backing for the Fed's choice to keep interest rates unchanged last week, citing an outlook that indicates continued decreases in inflation. Fed members

    Fed members Adriana D. Kugler and Thomas I. Barkin are scheduled to deliver speeches on Wednesday, which will likely be closely monitored for further insights into the Fed's stance on monetary policy.

     

    Disclaimer: For information purposes only. Past performance is not indicative of future results.
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    Source  Fxstreet
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