- The US dollar index is expected to reach around 97.55 during Friday’s Asian session.
- The US Flash Manufacturing PMI decreased to 49.5 in July, while the Service PMI increased to 55.2 within the same timeframe.
- Attention is focused on the upcoming US-China trade discussions and the FOMC policy meeting next week.
The US Dollar Index (DXY), which measures the USD against a selection of six global currencies, will likely remain positive for the second consecutive day, trading at approximately 97.55 during the Asian hours on Friday. Investors are particularly looking forward to the US durable orders data for June, set to be released later in the day.
The greenback benefits from a mixed collection of US economic indicators. Data from S&P Global released Thursday indicated that the flash manufacturing PMI dropped to 49.5 in July from a previous 52.0, which is below the market expectation of 52.5. On the brighter side, the service sector PMI increased from 52.9 in June to 55.2 in July, surpassing the anticipated 53.0. Overall, the combined PMI improved to 54.6 in July, an uptick from the earlier 52.9.
Market participants are keeping an eye on the Federal Open Market Committee (FOMC) meeting scheduled for next week. There’s a general consensus that the rates will remain unchanged during the July meeting, as policymakers are likely waiting for further clarity regarding the anticipated effects of tariffs on inflation. Financial markets currently indicate a nearly 60% likelihood of a 25 basis point interest rate cut in September.
On Tuesday, President Donald Trump announced a trade agreement with Japan. This deal involves implementing 15% tariffs on imports and Japan’s intention to invest $550 billion in the US. US Treasury Secretary Scott Bescent is set to discuss extending the deadline for trade negotiations with Chinese officials in Stockholm next week, where tariffs might escalate to 145% on the US side and 125% on China’s.
