US Dollar Index skids from fresh 19-year high to 106.50, Fed minutes eyed

• The DXY has witnessed a mild correction to near 106.50 after hitting a fresh 19-year high at 106.50.
• BOE’s gloomy outlook on the global economy has strengthened the DXY’s appeal.
• The release of the FOMC minutes will be the key event for further guidance.

The US dollar index (DXY) is being offered mildly after printing a fresh 19-year high at 106.50 on Tuesday. The asset witnessed some decent gains after violating a three-week-old high at 105.79 as recession fears soar on the Bank of England (BOE)’s statement on the global outlook.

BOE’s gloomy outlook for the global economy

The BOE cornered the volatility from the fossil fuels and other raw materials prices that might be responsible for economic shocks in the future. No doubt, the soaring price pressures in the global economy have pushed the policymakers from Western central banks on their toes. The policymakers are finding it hard to combat the headwinds from the runaway inflation rate.

FOMC minutes

The forward release of the Federal Open Market Committee (FOMC) minutes is underpinning the DXY against the risk-perceived currencies. Investors are worried over the fact that the minutes of the June monetary policy meeting will unfold some hawkish concepts for further guidance. Although the guidance will remain biased towards more policy tightening measures as the inflation rate has not displayed any slowdown signals yet.

Nonfarm Payrolls

Later this week, the release of the US Nonfarm Payrolls (NFP) will be the key event. A preliminary estimate for the job additions done by the US economy is 270k, significantly lower than the prior release of 390k. The Unemployment Rate may remain stable at 3.6%.

Key data this week: S&P Global PMI, ISM Services PMI, JOLTs Job Openings, ADP Employment Change, Initial Jobless Claims, Nonfarm Payrolls (NFP), Unemployment Rate.

Major events this week: Federal Open Market Committee (FOMC) minutes.