US Dollar Index advances towards 109.00 as bets soar for hawkish Fed Powell’s commentary

• The DXY is marching towards 109.00 as investors shift behind DXY ahead of Fed’s Powell.
• Fed Powell’s commentary is expected to remain hawkish on interest rates.
• The core PCE price index is expected to trim by 10 bps to 4.7%.

The US dollar index (DXY) has given an upside break of the consolidation formed in a narrow range of 108.47-108.58. The asset is expected to display a bullish imbalance move ahead as a break of opening consolidation is generally followed by volumes and wider ticks. On a broader note, the asset is displaying back-and-forth moves in a tad wider range of 108.00-109.27 for the entire week.

Fed’s Powell to sound hawkish at Jackson Hole

Investors are getting mixed responses from analysts over expected commentary from Federal Reserve (Fed) chair Jerome Powell at Jackson Hole Economic Symposium. No doubt, the evidence from inflation data speaks that the price pressures are about to find their peak, and contraction in private sector activities compels the Fed should slow down its velocity of hiking interest rates.

However, the inflation rate still holds above 8% and in order to tame the same, the Fed’s laborious job of hiking borrowing rates is far from over.

US Core PCE data

Investors will also focus on the US Core Personal Consumption Expenditure (PCE) data, which is expected to decline to 4.7% from the prior print of 4.8%. Another inflation indicator is indicating that price pressures are near a peak now. However, this could be contaminated by a recent slump in the overall demand by households.

Key data next week: Consumer Confidence, ADP Employment Change, Initial Jobless Claims, ISM PMI, Nonfarm Payrolls (NFP), Unemployment Rate, and Average Hourly Earnings.