US Dollar Trades Cautious – Fed in Focus This Week
At the start of a fresh trading week, the US dollar remains under slight pressure over worries about delay in economic recovery in the US, even as rising bond yields and safe haven appeal for the currency offer it support. At the time of writing, the US dollar index DXY is trading around 93.00.
The dollar received a boost after the US and China decided to postpone their review of the phase one trade deal, easing some concerns about heightened tensions between the two world leaders. However, other factors continue to drive uncertainty and keep the US dollar under pressure, especially the upcoming release of the Federal Reserve minutes and Democrats’ nomination convention.
Meanwhile, the US dollar is enjoying some support as a safe haven currency amid worries of a resurgence in coronavirus infections around the world, which could delay economic recovery. New cases raise worries that governments could reimpose lockdown restrictions, dampening the slight pick-up in demand and pressuring economies all over again.
The US dollar could continue trading cautiously as markets look for cues in the upcoming Fed minutes on changes to the central bank’s forward guidance coming up in September. Especially of interest will be the Fed’s reaction to managing inflation in the US.
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