The DXY Index was volatile last week, trading in a tight 104.1-104.6 range, due to conflicting currency market themes, DBS senior FX strategist Philip Wee notes.

Fed to keep the door open to lower interest rates

“Despite the futures market pricing a more than 100% chance for a Fed cut in September, the USD’s outlook was obscured by the twists and turns in the US Presidential Elections and the unwinding of JPY carry trades. Additionally, the JPY and the CHF became havens amid a sell-off in tech stocks.”

“At its FOMC meeting on July 30-31, the Fed should keep the door open to lower interest rates but avoid endorsing the market’s bet for a September cut. The guidance on the timing will likely come at the Kansas City Fed’s Jackson Hole Symposium on August 24-26, following the US unemployment rate data on August 2 and the CPI data on August 14.”