US dollar breaks its winning streak

Daily Currency Update

The US Dollar Index decreased today to the 101.41 range, shredding its three-day gains earlier this week. The green back is under constant selling pressure in negative territory ahead of the Federal Open Market Committee (FOMC) decision. The Fed stated that it may pause the hiking cycle, which in turn could lead to further decline in the US dollar. The Fed has been on a hiking spree to curb inflation since March 2022 which elevated the rates from a near zero level to the range of 4.75% to 5% within just 1 year.

The Fed is expected to hike rates by 25 basis points (bps) which may be the final hike this year. The banking crisis in the United States may make the Fed rethink its hawkish monetary policy stance even though inflation is still higher than Fed's target 2%. Inflation currently stands at 5%. US treasury’s benchmark 10-year notes decreased and were down 6.4 bps to near 3.37%, from 3.43% a closing yesterday.

The S&P Global services sector Purchasing Managers Index (PMI) increased from a reading of 52.6 for March to 53.6 in April. The data published by Automatic Data Processing (ADP) indicated that the private sector employment in the US grew by 296,000 in April, beating the market expectation, for an increase of 148,000, by an expansive margin.