⏳ Final hours! Save up to 60% OFF InvestingProCLAIM SALE

Dollar weakens as investors anticipate soft US economic landing

Published 28/05/2024, 05:08 pm
© Reuters.
USD/JPY
-

Investing.com -- On Tuesday, the US dollar edged lower despite short-dated US rates holding steady, influenced by a broader decline in cross-market volatility and a growing appetite for risk among investors. This shift is partly attributed to the anticipation of a soft US economic landing, a scenario that investors are positioning for ahead of the upcoming core PCE inflation data release.

The core Personal Consumption Expenditures (PCE) price index for April is scheduled for release on Friday, with market consensus predicting a modest 0.2% increase month-on-month. This figure, which aligns with previously released April Consumer Price Index (CPI) and Producer Price Index (PPI) data, is pivotal as it could reshape expectations for a potential Federal Reserve rate cut in September, currently estimated at a 44% likelihood. A confirmation of benign inflation could further pressure the dollar.

Today's economic calendar will reveal March house price data and May consumer confidence figures. The latter is particularly noteworthy as consumer confidence has been on a downward trend since January, raising concerns about whether spending by the top 20% of income earners can continue to compensate for the lower 60%'s economic challenges. ING has suggested that higher interest rates might eventually dampen consumer spending and slow US growth throughout the year.

The US Dollar Index (DXY), a measure of the currency against a basket of other major currencies, is approaching a critical support level at 104.40. This threshold represents the lower boundary of the dollar's rally this year. A drop below this point could signal that investors with long dollar positions may start to reduce their exposure in anticipation of the significant data release at the end of the week.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.