The US Dollar Index (DXY) is currently trading near 104.30 as investors eagerly await the release of the US Q2 flash Gross Domestic Product (GDP) data. The GDP data, set to be published at 12:30 GMT, will provide insights into the current state of the economy.
Estimates suggest that the US economy expanded at a faster pace of 2% annually, up from the previous reading of 1.4%. This growth rate exceeds the Fed’s forecast of 1.8% non-inflationary growth. Investors will also be keeping an eye on the GDP Price Index, which is expected to have decreased to 2.6% from the previous release of 3.1%, easing concerns about persistent inflation.
In addition to the GDP numbers, investors will be focusing on the US Durable Goods Orders for June, with New Orders for Durable Goods anticipated to show an increase of 0.3% from May’s 0.1%.
Looking ahead, the US Personal Consumption Expenditure Price Index (PCE) data for June, scheduled for release on Friday, will be a key driver for the US Dollar. The core PCE inflation, the Fed’s preferred inflation gauge, is expected to have slowed to 2.5% from May’s 2.6%, with a monthly growth of 0.1%. A decline in inflationary pressures would reinforce expectations of Fed rate cuts in September.
Amidst uncertainty surrounding the US presidential elections, market sentiment remains risk-averse, leading S&P 500 futures to give up gains seen in Asian trading hours. Additionally, 10-year US Treasury yields have fallen to 4.24%.
US Dollar FAQs
- What is the US Dollar (USD)? The USD is the official currency of the United States and is widely used in many other countries. It is the most traded currency globally, with over 88% of foreign exchange turnover.
- What impacts the value of the US Dollar? The USD value is influenced by the Federal Reserve’s monetary policy, which aims to control inflation and promote full employment through interest rate adjustments.
- What is Quantitative Easing (QE) and Quantitative Tightening (QT)? QE is a policy tool used by the Fed to increase credit flow during financial crises, weakening the USD. QT, on the other hand, involves reducing bond purchases and can strengthen the USD.
Understanding the factors affecting the US Dollar’s value and keeping abreast of economic indicators like GDP and inflation data can help individuals make informed decisions about their finances and investments.