- US Dollar Index flat lines around 97.85 in Monday’s early Asian session.
- Ukrainian President Zelenskiy faces US pressure to reach a peace deal with Russia that involves ceding territory.
- US Retail Sales came in line with expectations in July.
The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, trades on a flat note near 97.85 during the Asian trading hours on Monday. Traders prefer to wait on the sidelines ahead of a crucial meeting between US President Donald Trump and Ukrainian leader Volodymyr Zelenskiy later on Monday. The Federal Reserve’s (Fed) Jackson Hole symposium will take center stage later on Friday.
US President Donald Trump said after his talks with Russian President Vladimir Putin in Alaska on Friday that he will urge Zelenskiy to make a quick deal and sounded receptive to Putin’s demand that Ukraine give up large swathes of land, per Bloomberg. Ukrainian leader facing US pressure to reach a peace deal with Russia that involves ceding territory. Traders will closely watch the developments surrounding Trump-Zelenskiy talks. Any signs of escalating tensions could boost the safe-haven flows, supporting the US Dollar against its rivals.
Data released by the US Census Bureau on Friday revealed that the US Retail Sales increased by 0.5% MoM in July, versus a rise of 0.9% recorded in June (revised from 0.6%). This reading came in line with the market consensus. On an annual basis, Retail Sales rose 3.9% in July, compared to 4.4%, matching the expectations.
Meanwhile, the Consumer Expectations Index eased to 57.2 in August from 57.7 in July, highlighting some change of view regarding the months ahead. The one-year inflation expectations ticked up to 4.9% from 4.5%, and the five-year forecast increased to 3.9% from 3.4%.
These US economic reports have kept the case for a September Fed interest rate cut intact, which might weigh on the DXY in the near term. Money markets are now pricing in nearly a 93% possibility of a 25 basis points (bps) Fed rate cut in September, according to the CME FedWatch tool. However, there are some misgivings about what happens from there, with a 55% chance of another reduction in October and just a 43% probability of a third move in December.
