The US Dollar Index (DXY), a measure of the value of the US dollar (USD) against a basket of six global currencies, traded slightly higher near 98.80 during Asian trading hours on Wednesday (August 6th). Traders are preparing for speeches from Federal Reserve (Fed) policymakers, including Susan Collins, Lisa Cook, and Mary Daly, later this month.

The DXY remained strong as traders continue to assess global trade developments, which could trigger renewed market volatility. US President Donald Trump's latest trade deadline also falls on Friday, when a new round of high tariffs will take effect in several countries unless a last-minute agreement is reached to negotiate lower tariffs. Trump's announcement of these additional tariffs could strengthen the US dollar against its rivals.

Trump said on Tuesday he would soon announce a decision on his next Fed Chair. He has removed US Treasury Secretary Scott Bessent as a candidate to replace current Chairman Jerome Powell, whose term ends in May 2026. Trump will also announce a decision on a short-term replacement for Fed Chair Adriana Kugler, who resigned last Friday.

Meanwhile, a weak US employment report raised speculation of an interest rate cut by the US central bank next month. Furthermore, a dismal US Purchasing Managers' Index (PMI) report released on Tuesday contributed to the DXY's weakness. Data released by the Institute for Supply Management (ISM) on Tuesday revealed that the Services PMI fell to 50.1 in July, compared to 50.8 previously. This figure was lower than the expected 51.5.

Traders will take more cues from Fed speeches, as they may provide some clues about the outlook for US interest rates this year. Dovish remarks from Fed officials could further weaken the greenback, while hawkish comments from policymakers could boost the USD in the near term. (alg)

Source: FXstreet