Forex News

USD Index hovers around key level ahead of crucial data

Published by
Nonhlanhla P Dube
  • The US dollar index (DXY) is trading around 101.30, and investors expect the Federal Reserve to announce another 25 basis points rate hike at its meeting on May 3 due to hawkish Fedspeak and high inflation.
  • However, there is speculation that the Fed may pause its hiking cycle soon after the May event, leading to renewed downside pressure on the dollar, which is already under pressure due to an improvement in the sentiment surrounding the risk-associated universe.
  • South African investors should keep an eye on the US dollar index as it could impact the value of the South African rand, and any developments in the US-China trade conflict and geopolitical tensions with Russia and China could have a significant impact on global financial markets, including South Africa.

Investors seem convinced that the Federal Reserve will announce another 25 basis points rate hike at its meeting on May 3, amidst hawkish Fedspeak and with inflation still way above the Fed’s 2.0% target. However, the speculation of a pause in the Fed’s hiking cycle soon after the May event has emerged, which is also weighing on the dollar and yields. The Consumer Confidence gauged by the Conference Board, the FHFA’s House Price Index, and New Home Sales will be the key data to watch later in the NA session.

In the US, the dollar is facing renewed downside pressure due to an improvement in the sentiment surrounding the risk-associated universe. Additionally, the dollar is continuing to navigate in a consolidative phase against steady expectations of another rate increase in May by the Fed. Furthermore, there is a persevering disinflation and nascent weakness in some key fundamentals, which may lead to a pivot in the Fed’s hiking cycle following the May event.

This week in the US, there will be several key events to watch out for, including House Price Index, CB Consumer Confidence, and New Home Sales on Tuesday. On Wednesday, MBA Mortgage Applications, Durable Goods Orders, and Advanced Goods Trade Balance will be the main focus, followed by Flash Q1 GDP Growth Rate, Initial Jobless Claims, and Pending Home Sales on Thursday. Finally, on Friday, PCE/Core PCE, Employment Cost, Personal Income, Personal Spending, and Final Michigan Consumer Sentiment will be the key data to watch out for.

In South Africa, investors and traders can keep an eye on the US dollar index as it will have an impact on the value of the South African rand. Additionally, any developments in the US-China trade conflict and geopolitical effervescence vs. Russia and China could have a significant impact on the global financial markets, including South Africa.

Nonhlanhla P Dube

Nonhlanhla P Dube is a senior news reporter at Rateweb. Nonhlanhla is a student of International Relations at the University of South Africa. She reports primarily on personal finance and economics. You can contact her directly by email at nonhlanhla@rateweb.co.za

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Published by
Nonhlanhla P Dube
Tags: USD Index

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