FX.co ★ DXY Rises Toward 3-Week High

The dollar index surged above 98, reaching its highest point in nearly three weeks as it continued to gain momentum for the second consecutive session. This comes as financial markets assess new US economic data amidst ongoing uncertainty regarding potential Federal Reserve rate cuts. Last week, jobless claims decreased by 14,000 to a total of 218,000, significantly below expectations, indicating companies' reluctance to lay off staff despite a labor market showing signs of weakness. In addition, revised GDP data demonstrated an annual growth rate of 3.8% in the second quarter, the fastest pace in almost two years, driven by robust consumer spending that rebounded following a contraction in the first quarter. Other indicators revealed an increase in orders for business equipment and a reduction in the trade deficit. Federal Reserve Chair Jerome Powell recently noted rising threats to employment within what he described as a "less dynamic" labor market. However, market sentiment now reflects a lessened expectation of immediate rate cuts, with only 43 basis points of easing anticipated for the remainder of 2025. Investors are closely monitoring the upcoming release of the PCE inflation data on Friday, along with the political uncertainty surrounding a potential US government shutdown.