The US dollar strengthened in European trading on Tuesday, nearing seven-week highs as markets anticipated significant US economic data on housing prices and consumer sentiment.
Key Economic Indicators
Upcoming reports on housing prices and consumer sentiment are poised to offer critical insights into the trajectory of US interest rates and monetary policy for the remainder of the year.
Market Performance
The dollar index advanced by 0.1% to reach 105.59, after dipping to a session-low of 105.37. This follows a 0.3% decline on Monday, which marked the index’s first loss in three days due to profit-taking from its previous peak of 105.92, the highest in seven weeks.
Fed’s Stance
On Monday, San Francisco Federal Reserve President Mary Daly stated that the Federal Reserve is unlikely to reduce interest rates until there is clear evidence that inflation is moving towards the 2% target.
Interest Rate Projections
According to the FedWatch tool, there is a 67% probability of a 0.25% rate cut by the Federal Reserve, with this likelihood increasing to 79% by November.
Upcoming Data
Investors are now focused on imminent US data releases, including an anticipated 7% increase in housing prices for April. Additionally, the Conference Board’s consumer sentiment index is expected to drop to 100 in June from 102 in May.
