US Dollar: August weakness seen persisting – DBS
DBS Group Research economist Philip Wee argues that the Dollar’s outlook in August is weak after a sharp stumble at the end of July.
DBS Group Research economist Philip Wee predicts that the US Dollar will continue its downward trend in August, following a significant decline at the end of July. Factors contributing to the Dollar's vulnerability include a seemingly reluctant Federal Reserve led by Chairman Kevin Warsh, coordinated US-Japan currency interventions, and a more subdued Middle East geopolitical situation.
Wee states that Fed Chairman Kevin Warsh has disappointed investors who had been counting on his hawkish stance, as he focused on institutional reforms and scaled back forward guidance during the July 28-29 FOMC meeting. This shift resulted in a steepening of the US Treasury yield curve, indicating a decline in confidence in US monetary policy.
The British Pound is also experiencing a pullback against the US Dollar, moving back to the mid-range of the 1.3400s after reaching fresh seven-week highs above 1.3500 earlier in the day. Meanwhile, EUR/USD continues its downtrend, trading in the low 1.1500s due to the Greenback's relative strength. Gold's price has slipped as well, but remains supported by the $4,000 threshold.
The US Dollar's uncertainty and potential risks related to US-Iran talks, as well as AI developments, are likely to continue driving market sentiment.
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