US Dollar turns down as markets don’t get fresh clues from Powell
-
US
Dollar
slips
slightly
under
impact
of
Jerome
Powell’s
fresh
words. -
Investors
keenly
await
June’s
CPI
data
release
on
Thursday
for
clear
guidance. -
If
CPI
comes
in
soft
on
Thursday,
USD
is
poised
for
further
downside.
On
Thursday,
Despite
Powell’s
cautious
stance
at
his
visit
to
the
House
Financial
Services
Committee,
the
US
Dollar
(measured
by
the
DXY
index)
saw
minor
downturns
and
fell
to
105.00.
Powell’s
reluctance
toward
immediate
rate
cuts
and
his
hints
at
an
ongoing
assessment
of
data-driven
indicators
have
kept
the
markets
on
edge.
Signs
of
disinflation
in
the
US
economic
outlook
have
emerged,
and
the
market
confidence
in
the
September
rate
cut
remains
strong.
However,
Federal
Reserve
(Fed)
officials
including
Chair
Jerome
Powell
continue
to
tread
carefully,
underlining
their
inclination
toward
data-dependent
decisions
rather
than
hastened
action
in
implementing
rate
cuts.
Daily
digest
market
movers:
DXY
down
as
markets
continue
assessing
Powell’s
sentiment
-
Highlight
of
Wednesday
were
the
words
of
Fed
ChairPowell
to
the
House
Financial
Services
Committee. -
However,
his
testimony
before
the
House
did
not
provide
any
significant
or
fresh
influences. -
Powell
expressed
the
need
to
be
watchful
over
the
labor
market,
noting
visible
softening
in
the
sector. -
He
suggested
that
inflation
might
be
moving
toward
lower
levels
but
also
mentioned
his
cautious
optimism
about
it
sustaining
the
2%
target.
He
also
mentioned
that
he
doesn’t
hold
a
specific
inflation
number
pertaining
to
decisions
on
future
cuts. -
Expectations
from
Thursday’s
Consumer
Price
Index
(CPI)
continue
to
be
significant.
Projections
depict
the
headline
sinking
two
tenths
to
3.1%
YoY,
while
core
inflation
is
expected
to
stay
steady
at
3.4%
YoY. -
Market
sentiment
indicates
less
than
10%
chance
of
July
rate
cut,
while
betting
odds
for
a
September
cut
hover
around
80%,
according
to
the
CME
FedWatch
Tool.
DXY
technical
outlook:
Index
sees
some
decline,
DXY
above
100-day
SMA
is
a
good
sign
From
a
technical
viewpoint,
DXY
seems
to
have
slipped
into
a
negative
terrain,
indicated
by
both
the
Relative
Strength
Index
(RSI)
and
the
Moving
Average
Convergence
Divergence
(MACD)
showing
negative
signs.
Nevertheless,
despite
the
minor
setback
on
Wednesday,
the
DXY
managed
to
stay
above
its
100-day
Simple
Moving
Average
(SMA),
cushioning
the
impact
of
declines.
The
subsequent
support
levels
at
104.50
and
104.30
also
continue
to
be
staunch
barriers
against
further
drops.
On
the
flip
side,
to
regain
momentum
buyers
must
recover
the
105.50
level
to
retest
the
106.00
threshold.
Inflation
FAQs
Inflation
measures
the
rise
in
the
price
of
a
representative
basket
of
goods
and
services.
Headline
inflation
is
usually
expressed
as
a
percentage
change
on
a
month-on-month
(MoM)
and
year-on-year
(YoY)
basis.
Core
inflation
excludes
more
volatile
elements
such
as
food
and
fuel
which
can
fluctuate
because
of
geopolitical
and
seasonal
factors.
Core
inflation
is
the
figure
economists
focus
on
and
is
the
level
targeted
by
central
banks,
which
are
mandated
to
keep
inflation
at
a
manageable
level,
usually
around
2%.
The
Consumer
Price
Index
(CPI)
measures
the
change
in
prices
of
a
basket
of
goods
and
services
over
a
period
of
time.
It
is
usually
expressed
as
a
percentage
change
on
a
month-on-month
(MoM)
and
year-on-year
(YoY)
basis.
Core
CPI
is
the
figure
targeted
by
central
banks
as
it
excludes
volatile
food
and
fuel
inputs.
When
Core
CPI
rises
above
2%
it
usually
results
in
higher
interest
rates
and
vice
versa
when
it
falls
below
2%.
Since
higher
interest
rates
are
positive
for
a
currency,
higher
inflation
usually
results
in
a
stronger
currency.
The
opposite
is
true
when
inflation
falls.
Although
it
may
seem
counter-intuitive,
high
inflation
in
a
country
pushes
up
the
value
of
its
currency
and
vice
versa
for
lower
inflation.
This
is
because
the
central
bank
will
normally
raise
interest
rates
to
combat
the
higher
inflation,
which
attract
more
global
capital
inflows
from
investors
looking
for
a
lucrative
place
to
park
their
money.
Formerly,
Gold
was
the
asset
investors
turned
to
in
times
of
high
inflation
because
it
preserved
its
value,
and
whilst
investors
will
often
still
buy
Gold
for
its
safe-haven
properties
in
times
of
extreme
market
turmoil,
this
is
not
the
case
most
of
the
time.
This
is
because
when
inflation
is
high,
central
banks
will
put
up
interest
rates
to
combat
it.
Higher
interest
rates
are
negative
for
Gold
because
they
increase
the
opportunity-cost
of
holding
Gold
vis-a-vis
an
interest-bearing
asset
or
placing
the
money
in
a
cash
deposit
account.
On
the
flipside,
lower
inflation
tends
to
be
positive
for
Gold
as
it
brings
interest
rates
down,
making
the
bright
metal
a
more
viable
investment
alternative.
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