**Dollar Hovers Near Three-Month High as Investors Eye Key U.S. Data Releases**
*By Rae Wee, originally published on Reuters via TradingView News*
The U.S. dollar held close to its highest levels in three months at the start of the week, as traders braced themselves for a slew of crucial economic data releases from the world’s largest economy. The outcome of these releases will likely set the tone for global currency markets, especially in the wake of ongoing speculation about the future trajectory of Federal Reserve interest rate policy.
## The Dollar’s Recent Strength
At the opening of the global trading week, the U.S. dollar index, which measures the greenback against a basket of six major currencies, was steady at 105.81. This reading hovered just shy of Friday’s peak of 105.91, the index’s highest mark since mid-April. The dollar’s broad-based ascent has been fueled by growing doubts over how soon the Federal Reserve will pivot to monetary easing, compared to other central banks that have already embarked upon rate cuts.
The greenback advanced against most developed market currencies last week, indicated by a ranging but solid rally across several key pairings:
– The dollar notched gains of about 3.3% against the Japanese yen in June alone
– It also chalked up advances versus the euro amid political tumult in France and broader eurozone concerns
## Fed Path Remains Unclear
The strength of the dollar has paralleled reassessments in interest rate expectations. The market largely expects the Federal Reserve to ease policy this year, but persistent signs of U.S. economic resilience have cast doubt on the number and timing of rate cuts. The likelihood of aggressive rate reductions has ebbed and flowed with each new data release, such as labor market reports and inflation figures, making the upcoming week—filled with vital U.S. economic indicators—pivotal for traders and investors alike.
## Key U.S. Economic Releases Ahead
Investors will be closely watching several data releases, which could offer fresh signals on the U.S. economic outlook and, consequently, on Fed policy:
**1. Personal Consumption Expenditures (PCE) Price Index**
– This is the Federal Reserve’s preferred measure of inflation.
– The latest PCE data is due later in the week and will define the market’s expectations for the FOMC’s next move.
– Traders are especially sensitive to any signs of persistent inflation pressures, which could keep the Fed on a hawkish footing.
**2. Durable Goods Orders**
– Durable goods data will offer a read on manufacturing sector strength and broader business confidence.
– Weakness could provide fuel for dovish Fed speculation, while a solid report may reinforce the case for extended higher rates.
**3. Revised First-Quarter GDP**
– The update on U.S. economic growth in the first quarter will be critical, especially if there are substantial revisions.
– A robust reading may further propel the dollar, as it implies more runway for policy rates to remain elevated.
**4. Weekly Unemployment Claims & Consumer Confidence**
– These frequent data points will round out the economic picture, highlighting whether the labor market and consumer psyche remain resilient.
## Dollar, Yen, and European Currencies in Focus
The dollar’s move higher versus the Japanese yen has become a focal point for traders, particularly as the yen weakens to fresh multi-decade lows. In Asian trading, the dollar held at 159.77 yen, close to the 159.94 high reached on Friday. This marked the lowest point for the yen since late April, a level that previously triggered intervention by Japanese monetary authorities.
**Japanese Yen Nears Critical Thresholds**
– In late April, the rapid slide of the yen prompted the Bank of Japan and Ministry of Finance to step in, providing direct support for the currency by selling dollars.
– The yen remains under pressure due to the stark contrast between the Bank of Japan’s ultra-loose monetary policy and
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