US Dollar index climbed to two-month high ahead of Fed rate cut next week

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US Dollar index climbed to two-month high ahead of Fed rate cut next week

On Friday, the 26th of July 2019, during midday Asia-Pacific trading hours, the American dollar index (DXY) measured against a basket of six major currencies in an average has resurfaced above its two-month peak to 97.81 after reaching as much as 97.91 on yesterday (JUly 25th) during midday European trading hours, a level last seen on May 31st 2019, while investors’ seemed to be bracing for an introduction of a rancorous cycle of rate cut amid a slowing US economy.

Apart from that, appeals of safe-haven currencies likes of Swiss Franc and Japanese Yen appeared to have run out of steam following reveal of a resumption of Sino-US trade talk as early as next Monday (July 29th), as US Dollar has been on a sugar-rush against both Japanese Yen and Swiss Franc, while the American currency had added a weekly gain of 0.88 percent so far against Swiss Franc to $0.9901 and USD/JPY pair has posted a weekly rise of more than 0.80 percent to whirl closer its two-week peak to 108.57 Japanese Yen.

While US Federal Reserve is widely expected to cut interest rate by at least 25-basis point to 2.25 percent for upper bound and 2.00 percent for lower bound at its July 31st FOMC minutes, Bank of Japan is expected to keep its monetary policy unchanged at July 30th’s meet, but, would likely to hint a potential policy easing at a near-term outlook, which might support US Dollar against a softening Japanese Yen.

Meanwhile, adding that Japanese Yen may need to weather a correction course following July 30th’s BoJ (Bank of Japan) meet, a general manager of research at Research Institute of Tokyo, Takuya Kanda said, “The market had gotten ahead of itself with expectations for rate cuts, and now we are starting to correct this”.