The USD Index (DXY) has seen a further decline, dropping to the 100.90 zone as bets for a rate cut in September gain momentum following the release of the FOMC Minutes from the July meeting. This decline has pushed the Greenback to levels last seen in late December 2023, below the sub-101.00 mark.
Key Points for Thursday, August 22:
- US yields are down across the board, contributing to the USD Index retreat.
- Expectations of a rate cut in September are on the rise.
- The Jackson Hole Symposium begins on August 22.
- US economic data includes Initial Jobless Claims, Chicago Fed National Activity Index, Existing Home Sales, and S&P Global Manufacturing and Services PMIs for August.
EUR/USD and GBP/USD Reach New Highs
EUR/USD has surged to new year-to-date highs above 1.1170, driven by the weakening US Dollar. The ECB will release Meeting Accounts, while preliminary PMI data for Germany and the euro area will also be in focus. In addition, the flash Consumer Confidence gauge for the EU will be released.
GBP/USD has hit fresh highs above 1.3100 as the Greenback continues to face selling pressure. Data on S&P Global Manufacturing and Services PMIs for August will be released, along with CBI Industrial Trends Orders.
USD/JPY and AUD/USD Trends
USD/JPY has broken below the 105.00 support level, reflecting lower yields and a decline in the US Dollar. Japan’s preliminary PMI data and weekly Foreign Bond Investment figures will be watched closely.
AUD/USD has climbed to multi-day highs near 0.6760 due to the weakening US Dollar bias. Flash PMI data from Judo Bank will be released on August 22.
Market Impact and Analysis
The ongoing recession fears and demand worries from China have weighed on trader sentiment, pushing WTI prices to seven-month lows around $71.50 per barrel. Gold prices have seen a slight increase, holding above $2,500 per ounce, while Silver has surpassed $29.00 per ounce.
Overall, the current market conditions suggest a bearish outlook for the US Dollar against major currencies like the Euro and Pound. Investors should closely monitor upcoming economic data releases and central bank actions for further insights into market trends and potential trading opportunities.