US Dollar Index steadies around 104.40 ahead of Fed Powell, US PMI in focus

The US dollar index (DXY) is auctioning in a narrow range of 104.40-104.45 ahead of Federal Reserve (Fed) chair Jerome Powell’s testimony. The FX domain is relatively quiet as investors are expecting a hawkish stance on July monetary policy from Fed Powell in his testimony.

Fed Powell to unlock some mysteries in his testimony

In May’s monetary policy press conference, Fed Powell announced that the 75 basis points (bps) rate hike is not in consideration. Despite that, Fed Powell features a bumper rate hike, which signals that the inflation mess is worsened now, which has forced Fed Powell to move beyond the statement. The guidance on inflation targets and growth prospects will be of significant importance. Apart from that, the guidance on the extent of the interest rates to be announced in July possesses key importance.

Lower PMI forecasts to trim demand estimates

On Thursday, the IHS Markit will report the Purchase Managers Index (PMI) figures, which are seen as extremely lower. The Services PMI is expected at 49.1 against the prior print of 53.2. While the Manufacturing PMI is expected to slip to 54.7 from the former figure of 55.7. A slippage in the Services and the Manufacturing PMI eventually indicates a plunge in the aggregate demand.

Key data this week: Initial Jobless Claims, S&P Global PMI, Bank Stress Test Info, Michigan Consumer Sentiment Index (CSI), and New Home Sales.

Major events this week:  Fed chair Jerome Powell's testimony and European Union (EU) Leaders summit.