US Dollar Index holds near 99.19 as markets price 70% chance of a year-end Fed rate hike despite softening consumer outlook.
The US Dollar Index (DXY) remained little changed at 99.19, with Treasury yields showing a slight bull-steepening bias. Markets continue to price a high probability of further Federal Reserve rate hikes, with a 70% chance of a hike by year-end and a full hike expected by March 2024.
Consumer confidence edged up marginally to 93.1 in May from 92.8, but remains in negative territory. Analysts note that while confidence has historically been a weak economic indicator, persistent inflation and a gloomy outlook could pressure lower-income households.
Investors are closely watching Thursday’s April PCE price data, with expectations for headline and core inflation at 3.8% and 3.3% year-over-year, respectively.