On Wednesday, the dollar index (DXY00) rose by 0.19% amidst mixed economic signals. The rise followed comments from Federal Reserve Chair Warsh at a central bankers’ meeting in Portugal, where no guidance on interest rates was provided. Additionally, the euro weakened after Eurozone June CPI data reported an annual inflation rate of 2.8%, below expectations of 3.0%, while the Japanese yen hit a new 39-year low.
The U.S. June ADP employment change recorded an increase of 98,000, falling short of the anticipated 120,000. The ISM manufacturing index also dropped to 53.3, below the forecast of 53.9. Swaps markets reflect a 27% chance of a 25 basis point rate hike by the Fed’s next FOMC meeting on July 28-29.
In Japan, consumer confidence rose slightly to 33.8, still missing expectations, while the Q2 Tankan manufacturing conditions unexpectedly increased to an 8-year high of 22. As intervention risks to stabilize the yen are noted, the Bank of Japan is seen as proceeding cautiously with policy adjustments, leading to only a 3% chance of a rate hike at their July 31 meeting.
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