The US Dollar Index (DXY), a measure of the value of the US dollar (USD) against a basket of six global currencies, strengthened slightly to around 98.15, ending two consecutive days of declines during Asian trading hours on Friday (August 8th). Federal Reserve Chairman Alberto Musalem is scheduled to speak later on Friday.

The DXY strengthened after Federal Reserve (Fed) Governor Christopher Waller reportedly emerged as a leading candidate to replace embattled Fed Chairman Jerome Powell. Waller argued that the US central bank could "view" the inflationary impact of tariffs as transitory. He supported a quarter-point cut last week when his colleagues voted to keep interest rates unchanged.

Meanwhile, Atlanta Fed President Raphael Bostic said he still views one rate cut as a possibility this year, adding that there is reason to be skeptical that the inflationary impact of tariffs will be transitory.

Traders increased their bets that the Fed will cut interest rates in September after data showed significantly weaker job growth in the three months to July and weaker consumer spending. According to the CME FedWatch tool, the market has priced in a nearly 94% probability of a 25 basis point (bps) rate cut at the September meeting, up from 48% a week ago. Rising expectations of a Fed rate cut could weaken the US dollar in the near term.

Data from the US Department of Labor (DOL) on Thursday showed that Initial Jobless Claims for the week ending August 2 increased to 226,000. This figure is above the market consensus of 221,000 and higher than the 218,000 in the previous week. (alg)

Source: FXstreet