The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is halting its five-day winning streak and trading around 99.80 during the Asian hours on Thursday. However, the Greenback appreciated after the Federal Reserve (Fed) decided to hold its benchmark federal funds rate in a range of 4.25%-4.5% at its July meeting on Wednesday, as widely expected.
Fed Chair Jerome Powell said in a post-policy conference that the US central bank has “made no decisions” about a potential policy change in September, and it may take a bit to assess the effect of tariffs on consumer prices.
US President Donald Trump announced a new trade deal with South Korea, imposing a 15% US tariff on imports from South Korea. The agreement also includes a $350 billion commitment from South Korea toward US-owned and controlled investments, Reuters reported on Wednesday. Moreover, US Commerce Secretary Howard Lutnick said that the United States (US) has made trade agreements with Cambodia and Thailand.
The US Dollar also drew support from stronger-than-expected US economic data. US Gross Domestic Product (GDP) expanded at an annual rate of 3.0% for the April through June period. This figure followed the 0.5% contraction in the first quarter and came in stronger than the expectation of 2.4%.
Traders await the US Personal Consumption Expenditures (PCE) Price Index, due on Thursday, which is expected to accelerate slightly. On Friday, Nonfarm Payrolls (NFP) is expected to hold in positive territory, which could add further fuel to rate hold fears.
