Softer US consumer confidence and receding Fed rate hike bets push the Dollar Index back into a 98.5-99.0 range ahead of key PCE data.
The US Dollar Index (DXY) retreated to a 98.5-99.0 range after failing to sustain gains above 99, pressured by softer economic data and fading expectations for a September Fed rate hike. The 30-year Treasury yield fell 5.9 basis points to 5.165%, extending Monday’s 4.6 bps decline, while Fed hike probabilities dropped to 38% from 72% in late July.
US consumer confidence weakened in August, with the Conference Board index slipping to 89.4, below the 90.2 consensus and July’s revised 90.2 reading. Retail sales and nonfarm payrolls declines earlier in the summer contributed to cautious sentiment, particularly around future employment prospects.
Markets now await July’s PCE inflation report, expected to show headline inflation easing to 3.6% YoY from 3.7% in June, with core PCE steady at 3.3%. Monthly headline PCE is forecast to rise 0.1%, while core is seen increasing modestly.