Daily digest market movers: US Dollar weakens as market anticipates strong Fed easing

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  • DXY Index is expected to weaken in the short term due to the market's perception that the Fed is set to relax monetary policy in light of recent data indicating an economic slowdown.
  • July Retail Sales report showed a stronger-than-expected rise, signaling resilient consumer spending and suggesting the US economy may not be as weak as feared.
  • The robust labor market continues to drive wage increases, supporting consumer spending and suggesting no immediate recession threat.
  • This suggests that the market seems to be overestimating the Fed, and that might get a surprise if the bank delays the cutting cycle.
  • On Thursday and Friday, Fed Chair Jerome Powell will be on the wires at the Jackson Hole Symposium, where markets will look for clues regarding the next steps.


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