DXY Falters Amid Softer US Data and Receding Fed Hike Expectations

The US Dollar Index (DXY) has returned to its narrow trading range of 98.5-99.0 after stalling slightly above 99 due to softer US data and receding expectations for a September Fed hike, according to DBS Group Research economist Philip Wee.

Last week's sell-off was driven by rising US long bond yields, but the 30-year yield has since fallen by 5.9 basis points (bps) to 5.165%, extending Monday's decline of 4.6 bps.

The market is now pricing in a 38% chance of a September 16 Fed hike, down from 72% at the end of July.