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The dollar index (DXY) fell by 0.33% on Monday, dropping from a three-week high due to dovish comments from Fed officials indicating support for a potential rate cut at the next FOMC meeting. Fed Governor Bowman and Chicago Fed President Goolsbee expressed favor for reducing rates if inflation pressures remain contained. Market expectations currently reflect a 23% chance of a 25 basis point cut after the July 29-30 FOMC meeting.
In the Eurozone, the June manufacturing PMI remained unchanged at 49.4, below expectations of 49.7, with ECB Governing Council member Centeno suggesting that the economy requires further stimulus. There is a 6% probability of a 25 basis point rate cut during the ECB’s policy meeting on July 24.
In Japan, the yen reached a 1.25-month low against the dollar amid rising energy costs, prompted by tensions in the Middle East. However, it recovered as the June Jibun Bank manufacturing PMI rose to 50.4, the highest level in 13 months. The Japanese Finance Ministry announced a reduction in long-term bond sales by ¥3.2 trillion ($21.7 billion) starting in July.
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