UPSIDE IN DOLLAR INDEX SEEN CAPPED BY RECENT US DATA

Published on Jun 21, 2024 12:23

The US dollar is staying relatively steady on Friday with rising expectations of a Federal rate cut on the back of recent data likely to cap upside. Data showed that first-time applications for U.S. unemployment benefits fell moderately last week, while new housing construction dropped to the lowest level in nearly four years in May, suggesting that economic activity remained moderate in the second quarter. Initial claims for state unemployment benefits declined 5,000 to a seasonally adjusted 238,000 for the week ended June 15, the Labor Department said. That reversed only about a third of the surge in the prior week, which had pushed up claims to a 10-month high. Moreover, the Commerce Department`s Census Bureau said Housing Starts declined 5.2% to a seasonally adjusted annual rate of 982K units in May, and Building Permits fell 2.9% to 949K units. Currently, the DXY is marginally lower at 105.21 in line with a pullback in US benchmark treasury yields quoting at 4.25%. The dollar index futures however held above 105 mark as Fed holds on to higher rates at a time when other central banks have already started cutting rates.