- The US Dollar began Tuesday with a strong rebound.
- Fed officials are remaining cautious given mixed economic data.
- May’s PCE figures will be released on Friday and will be the highlight of the week.
On Tuesday, the US Dollar, as measured by the Dollar Index (DXY), started the week weakly but has since strengthened to 105.70. The recovery in US yields appears to be ignoring a slight decline in consumer confidence reported during the session.
The U.S. economic picture remains complicated: While there are some signs of declining inflation, most Federal Reserve officials remain cautious.
Daily Digest Market Trends: DXY shrugs off weak sentiment data with hawkish bets
- Investors focused on the Conference Board’s consumer confidence index on Tuesday, which fell slightly to 100.4 from a revised 101.3 in May, signaling a somewhat slower pace of consumer spending activity.
- Moving on to Thursday, revised gross domestic product (GDP) growth for this year is expected to remain at 1.3%.
- Friday will be a key event as the Fed is scheduled to release May personal consumption expenditures (PCE) data, its go-to inflation measure.
- Headline and core PCE are both forecast to fall to 2.6% year-over-year, down from 2.7% and 2.8%, respectively, in April.
- Expectations are growing that the Fed may cut interest rates in November, with a 70% chance that a cut could come as early as September.
- PCE data plays a key role in influencing market forecasts.
Daily Digest Market Trends: DXY shrugs off weak sentiment data with hawkish bets
The technical outlook remains positive with indicators nicely in the green: the Relative Strength Index (RSI) is trending up above 50 and the Moving Average Convergence Divergence (MACD) has formed green bars, suggesting that bulls are gaining momentum.
Additionally, the DXY index has maintained its position above the 20-day, 100-day and 200-day simple moving averages (SMA), confirming that the overall outlook is positive.
