US Dollar extends losses as markets continue digesting CPI figure from the US

• 
  US
  Dollar
  continues
  losing
  ground
  in
  light
  of
  weak
  CPI
  figures
  and
  UoM
  data.
• 
  Markets
  still
  foresee
  a
  September
  rate
  cut.
• 
  Despite
  hot
  PPI
  data,
  US
  Treasury
  yields
  are
  falling,
  diminishing
  allure
  of
  USD.

The
US
Dollar
Index
(DXY)
remains
weak
on
Friday,
sitting
at
April
lows.
This
is
largely
a
response
to
the
soft
US
Consumer
Price
Index
(CPI)
figures
on
Thursday,
combined
with
softer
University
of
Michigan
(UoM)
sentiment
data,
both
supporting
the
prospect
of
a

Federal
Reserve
(Fed)
rate
cut
in
September.

Although
the
market’s
confidence
in
a
pending
rate
cut
is
growing,
Fed
officials
have
maintained
a
careful
approach,
emphasizing
their
dependence
on
rigorous
data
analysis
before
initiating
such
substantial
changes.

Daily
digest
market
movers:
DXY
wanes
despite
rising
PPI

• US
  Producer
  Price
  Index
  (PPI)
  for
  final
  demand
  rose
  to
  2.6%
  YoY
  in
  June,
  an
  increase
  from
  2.2%
  last
  month,
  as
  revealed
  by
  the
  US
  Bureau
  of
  Labor
  Statistics
  (BLS)
  on
  Friday.
  This
  outcome
  exceeded
  market
  expectations
  of
  2.3%.
• Annual
  core
  PPI
  increased
  by
  3%
  during
  the
  same
  period,
  surpassing
  both
  the
  previous
  month’s
  rise
  and
  the
  anticipated
  market
  figure
  of
  2.3%.
• On
  a
  monthly
  basis,
  PPI
  and
  core
  PPI
  escalated
  by
  0.2%
  and
  0.4%,
  respectively.
• Despite
  positive
  PPI
  data,
  soft
  CPI
  figures
  and
  softer
  UoM
  sentiment
  data
  (reported
  at
  66.0
  versus
  the
  forecast
  of
  68.5
  and
  the
  previous
  value
  of
  68.2)
  continue
  to
  bolster
  the
  argument
  for
  a
  September
  rate
  cut.
• CME
  FedWatch
  Tool
  now
  shows
  an
  86%
  probability
  of
  a
  25-basis-point
  cut
  in
  September,
  and
  some
  investors
  bet
  on
  a
  50-basis-point
  cut

DXY
technical
outlook:
Bearish
sentiment
worsens
as
DXY
breaches
200-day
SMA

The
DXY
Index’s
breach
of
its
200-day
Simple
Moving
Average
(SMA)
has
intensified
the
negative
outlook
for
the
USD,
with

indicators
including
the
Relative
Strength
Index
(RSI)
and
the
Moving
Average
Convergence
Divergence
(MACD)
still
deep
in
a
negative
trajectory.

The
index
now
trades
at
its
lowest
level
since
April,
amplifying
the
bearish
sentiment.
But
after
losing
more
than
0.80%
in
just
two
sessions,
a
slight
upward
correction
may
be
possible.
However,
the
overall
technical

outlook
remains
bearish.