The US dollar continued its upward trend for the fifth consecutive session as American traders prepared to return from a holiday amidst a busy week filled with economic data releases.
On Tuesday, the greenback saw gains against major counterparts, leading to a 0.15% increase in the Dollar Index. Australia’s dollar performed poorly due to a drop in iron-ore futures and lower-than-expected gross domestic product inputs.
Investors are eagerly anticipating a series of US economic data releases, including manufacturing data on Tuesday, services data on Thursday, and crucial non-farm payroll figures on Friday.
These releases will determine if the current market expectations for Federal Reserve policy easing are warranted. The swaps market is currently pricing in a 25% chance of the Fed cutting its benchmark rate by more than 25 basis points this month.
According to strategists at Malayan Banking Bhd, led by Saktiandi Supaat, the US dollar remains vulnerable to further bullish momentum if the manufacturing data surpasses expectations, leading to a significant reassessment of Fed rate cut probabilities. The strategist emphasized the importance of the August non-farm payroll release on Friday as a key event that could impact the market significantly.
