U.S dollar falls to lowest point since January

The selling pressure on the US dollar persisted on Monday morning, as the USD Index fell to 102 index points, its lowest level since early January.

Investors will closely monitor central bank officials’ remarks, and there won’t be any high-impact data releases on the economic calendar. The risk-on attitude of the market and the falling US Treasury yields combined to pull the safe-haven US dollar lower on Friday.

The USD lost ground, and can’t regain its strength despite a greater-than-expected increase in US consumer sentiment reported in the afternoon.
For the fifth week running, the USD Index ended the week lower than it started, falling more than 0.5 percent on Friday. It was challenging for the USD to maintain its position going into the weekend due to an improving risk appetite and the drop in US Treasury bond yields.

The US 10-year yield remains negative below 3 percent in the morning hours of Europe on Monday, and futures for the US stock index are essentially flat for the day.

The yellow metal broke through $2,500 an ounce for the first time, and the yen suddenly shot higher, putting pressure on the Nikkei.

The possibility of easing in September was hinted at by Federal Reserve members Mary Daly and Austan Goolsbee during their weekend absence, and the dovish outlook is expected to be reinforced in the minutes of this week’s final policy meeting. Investors anticipate that when Fed Chair Jerome Powell speaks on Friday in Jackson Hole, he will address the need for a cut.

The U.S inflation scare that had dominated the policy debate since prices started to soar during the pandemic has now largely vanished, according to Barclays economist Christian Keller, even though it may still be too early to declare victory and central bankers will undoubtedly be wise to avoid this in their official rhetoric. Futures indicate a 25% chance of 50 basis points with significant variation based on the results of the upcoming payroll report.

They are fully priced for a quarter-point move.
A significant downward revision of between 600,000 and one million positions could be seen in the yearly benchmark revisions to the jobs series, which are scheduled for this Wednesday.

However, this would probably overstate the weakness of the labor market. It is currently anticipated that the U.S. will land more softly.  Nasdaq futures are up 0.3 percent and S&P 500 futures are up 0.2 percent due to the economy, building on the gains from the previous week. Later today, Christopher Waller, a policymaker at the Federal Reserve, is scheduled to speak. Being one of the Fed’s more aggressive rate-setters, Waller’s rejection of rate-cut bets could boost the USD.