Dollar Seeking Direction Ahead of US Manufacturing Data

3 Haziran 2024

Today market analysis on behalf of Milad Azar Market Analyst at XTB MENA

In the early session, the US dollar remained stable after experiencing two consecutive sessions of decline last week. Notably, May marked the dollar’s first monthly decline this year.

The market is currently seeking direction amid speculation about potential Federal Reserve rate cuts in 2024, driven by perceptions of stabilizing US inflation. Friday’s PCE data has been carefully scrutinized by market participants for clues on interest rate adjustments, leading to some slight improvements in bets for the next probable rate cut, with September appearing as the potential starting point for easing this year. In this regard, US treasury yields could remain under pressure as traders monitor new data.

Market participants are now focusing on the upcoming ISM Manufacturing PMI, which is expected to show an increase to 49.8 points in May, up from April’s 49.2 points. The US manufacturing sector contracted in April, down from a near-term peak in March. The dollar could continue to face pressure later today if the manufacturing data reveals a figure lower than the market consensus, which anticipates an improvement in May.

 

ZAID BAREM / YMM