Talking Points:
- The only 'high' rated release on the economic calendar is due out tomorrow, and there is still room in Fed funds futures to price in a September rate hike.
- A legitimate topside breakout for the DXY[1] Index hinges largely on whether or not a weekly close can be achieved through 95.53.
- Retail traders[2] are have faded both EUR/USD[3] and GBP/USD[4] losses, leading the IG Client Sentiment Index to a bullis outlook for the US Dollar.
See our longer-term forecasts for the US Dollar, Euro[5], British Pound[6] and more with the DailyFX Trading Guides[7]
The US Dollar (via the DXY Index) has made very little progress this week, not entirely unsurprising given the relatively quiet economic calendar. But the end of the week may see a change in trading conditions as the only 'high' rated event on the economic calendar is due out, when the July US Consumer Price Index is released on Friday.
While the first full week of August has thus produced numerous important developments, including more tariffs in the US-China trade war[8], signs that China is letting the Yuan devaluation go unchecked[9], and the Reserve Bank of New Zealand crushing speculation of a rate hike before 2020, neither a single nor a series of developments has led to any significant movement in rate hike expectations for the Federal Reserve's September policy meeting.
Coming into the week, there was a 90% chance of a 25-bps rate hike in September and a 65% chance of another hike in December. Ahead of the release of the July US CPI report,
