Investing.com — The U.S. dollar has been supported since the start of the week as bond yields marginally increased and the momentum in equity markets slowed. Despite positive U.S. economic data, there is an expectation of continued upside risks for Treasury yields in the near term, leading to skepticism about further weakening of the dollar before the end of May.
The situation in Iran has had a limited effect on global markets. There has been no clear impact on commodity prices, which would typically be the first to reflect any significant geopolitical changes.
The economic events of today include the release of the Philadelphia Fed non-manufacturing index and speeches by various Federal Open Market Committee (FOMC) members, such as Christopher Waller, John Williams, Raphael Bostic, and Tom Barkin. Market expectations for Federal Reserve easing by the end of the year have been slightly reduced to 42 basis points. However, significant shifts in Overnight Index Swap (OIS) pricing are not anticipated until the release of the U.S. core Personal Consumption Expenditures (PCE) price index on May 31.
The outlook on the dollar remains neutral for the upcoming days, with a slight tilt towards potential gains. Key economic indicators such as the Consumer Price Index (CPI) in Canada, the United Kingdom, and Japan, as well as the Purchasing Managers’ Index (PMI) in the eurozone, might cause variations among the Group of Ten (G10) currencies, with the dollar possibly not establishing a definitive trend this week. Additionally, a policy meeting is scheduled in New Zealand, where the absence of dovish signals could bolster the New Zealand dollar (NZD). Concurrently, there is an anticipation of upside risks for the USD/JPY exchange rate in the near term.
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