US Dollar Drifts Lower Amid End Of Rate Hike Cycle
During the early trading session on Tuesday, the US Dollar continued to drift lower and is now trading at a 1-year low amid fears of an end to the Fed's tightening cycle.
That's why even the Dollar index continues to shed points which signal the USD weakness against 6 other currencies. The US Dollar Index lost 0.1% of its value against the other 6 currencies and was hovering near 99.415. If we look back, the Dollar index is just slightly higher than its April 2022 low of 99.362!
The current market mood is not supportive of the US Dollar, as only one more rate hike is on the cards. After that, the markets are expecting the Fed to end its year-long tightening cycle as inflation is showing signs of a slowdown.
All of this speculation has caused the US Dollar to record one of its worst weeks in the 8-month duration as it lost 2% of its value against other currencies.
US Retail Sales Data Is Awaited
It appears that the market is now awaiting the release of the US industrial production and retail sales data. These economic releases will shed more light on how the world's largest economy is performing and will also reveal the interest rate path.
For the most part, retail sales in the USA will likely improve during June. Similarly, industrial production in the USA will also grow during June and will highlight the US economy's resilience.
However, it still remains to be seen whether these economic releases which change the market sentiment or not!
According to an ING analyst, the last week's data is a sign of disinflation in the USA and its aftereffects are being seen across the FX landscape. Looking ahead, they said that the next few days will reveal whether the dollar will remain on the backfoot or not!