The US Dollar drops on speculation of two rate cuts

Dallas Manufacturing Index for June Stays Low

The Dallas Fed Manufacturing Business Index for June showed an improvement, albeit slight, with the index moving to -15.1 from the previous -19.4. This month's Texas business surveys indicated a stagnant manufacturing sector, with the production index ticking up to 0.7 from May's -2.8, signaling minimal changes in output.

There were mixed results across different areas of the manufacturing sector. New orders remained slightly negative, capacity utilization decreased, but shipments saw some improvement.

US Dollar

USD corrected amid strong speculation of two interest rate cuts by the Federal Reserve this year. As expectations of Fed rate cuts have increased while inflationary pressures ease in the US.

Gold

Prices rebounded from $2,315 as the USD came under pressure on Monday. Investors anticipate the Fed will reduce interest rates twice this year, boosting the economic outlook as preliminary PMI data showed faster expansion in June. However, gold could face pressure as US bond yields have rebounded, with 10-year Treasury yields rising to 4.27%. Higher yields on interest-bearing assets increase the opportunity cost of holding non-yielding investments like gold.