The US dollar index opened the week with an upside gap above 96.00, but then it consolidated testing support at 95.50.
On the one hand, the greenback is supported by the demand for it as a safe haven and because the European central banks are expected to further ease policy. American economic data released during the past week were positive: GDP growth in the first quarter was slightly revised upwards, consumer confidence increased and Chicago PMI showed strong gains. However, the Fed’s favorite inflation indicator – personal consumption expenditures (PCE) – remained below target showing no growth in annualized inflation.
Next week will be busier in terms of the US economic data. On Monday there will be a bank holiday because of Independence day, but on Tuesday America will release minutes of June FOMC meeting and on Friday there will be the release of nonfarm payrolls. The market players will hope for a better NFP reading compared to the previous weak reading for May. Further more, the expectations for the Federal Reserve’s rate hike declined and will stay low because of Brexit uncertainty, regardless of the data released in the US. Fed funds futures probability index gives a 0% chance of the Fed’s action to raise interest rates at the next meeting on July 27. This, in turn, means that bullish potential for the US dollar will be limited.