US Dollar Index Holds Near 96.50 Amid Rate Cut Speculation and Mixed Data

US Dollar Index Holds Near 96.50 Amid Rate Cut Speculation and Mixed Data

The US Dollar Index (DXY) remains stable around 96.50 during the Asian session on Wednesday, holding close to its lowest level since February 2022. Investors are digesting a mix of economic signals and growing speculation around a potential Federal Reserve rate cut as early as July.

Powell Open to July Rate Cut

In a statement on Tuesday, Fed Chair Jerome Powell reaffirmed that while the Fed remains data-dependent, it is not dismissing the possibility of an interest rate cut in the July meeting. Reinforcing that sentiment, US Treasury Secretary Bessent commented that the Fed is likely to cut rates no later than September.

Economic Indicators Paint a Mixed Picture

The economic data remains mixed. The ISM Manufacturing PMI rose to 49.0 in June, slightly above the forecast of 48.8, and up from 48.5 in May — signaling modest improvement in manufacturing activity, though still below the 50 expansion mark.

Additionally, US JOLTS Job Openings surprised to the upside, increasing to 7.76 million in May from 7.395 million in April, exceeding expectations of 7.3 million. The labor market’s continued strength may give the Fed pause in acting too swiftly.

Market Focus on ADP Report

Traders now shift their focus to the ADP Employment Change data for June, set for release later today. The report may provide further clues on the Fed's rate decision path and potentially shake the DXY’s consolidation pattern.

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