DXY retreats following the PMIs

The US Dollar Index (DXY) fell towards 104.13, earlier during the North American session, immediately after the mixed PMI reading from Standard & Poor’s and the Federal Reserve’s dovish policy bets added to the US currency’s decline.

It is expected that the reading of the personal consumption expenditures index, Durable Goods Orders, and GDP revisions for the second quarter will play the most prominent role on Thursday and Friday. As for the North American session, Wednesday, the markets witnessed the decline of the US dollar to its lowest daily levels, 104.13, largely affected by the PMIs figures. Meanwhile, markets are continuing to bet on the Fed’s dovish outlook, DXY then headed towards the 104.268 mark, at the time of writing.

US Interest Bets

With inflation steadily showing signs of easing, market participants have become confident about the possibility of a rate cut in September, yet Fed officials continue their dovish approach and remain data dependent. As such, attention turns to the next key data, namely core Personal Consumption Expenditures (PCE) and Q2’s GDP numbers on Thursday and Friday.

PMIs

The US private sector continued its healthy expansion, with the S&P Global Composite PMI rising to 55 from the previous reading of 54.8 recorded last June, and in order to balance this, the global manufacturing PMI fell to 49.5 from 51.6 in June, in While the Services Purchasing Managers’ Index rose slightly from 55.3 to 56.

Expectations continue to support a possible first US interest rate cut in September, although upcoming GDP and personal consumption expenditures data will largely determine the dynamics of the dollar index for the remainder of the current trading week.