AUDUSDDOLLAR INDEX on a dramatic twist of reversal on friday june 13th 00;00 time asian session at demand floor 97.621.
dollar reclaims 98.360 by londom session putting pressures on EURUSD,AUDUSD ,USDJPY,GBPUSD ,NZDUSD.
3:00pm
USD
Prelim UoM Consumer Sentiment
53.5 52.2
USD
Prelim UoM Inflation Expectations
6.6%
The University of Michigan (UoM) Consumer Sentiment and Inflation Expectations data will influence the US Dollar Index (DXY) and Federal Reserve policy expectations based on whether the prints exceed or miss forecasts.
Scenario 1: Better-Than-Expected Data
Consumer Sentiment greater than 53.5 and Inflation Expectations > 6.6%:
DXY Reaction: Likely to rise as stronger sentiment and sticky inflation expectations reduce odds of near-term Fed rate cuts. Traders may price out dovish bets, supporting the dollar.
Fed Implications: Elevated inflation expectations (above 6.6%) would reinforce the Fed’s cautious stance, delaying rate cuts until late 2025 or 2026.
Key Levels: DXY could retest 99.206 –99.00 resistance.
Scenario 2: Worse-Than-Expected Data
Consumer Sentiment less than 53.5 and Inflation Expectations < 6.6%:
DXY Reaction: Likely to decline as softer sentiment and easing inflation fears boost bets on Fed rate cuts. Markets could price in a September cut more aggressively.
Fed Implications: Lower inflation expectations (e.g., 6.0–6.5%) would align with recent CPI/PPI cooling, giving the Fed confidence to ease policy sooner.
Key Levels: DXY may drop toward 97.954
Scenario 3: Mixed Data
Sentiment beats, inflation misses (or vice versa):
DXY Reaction: Range-bound or choppy. For example, higher sentiment but lower inflation could offset, keeping DXY in a range bound
Fed Implications: The Fed would emphasize the inflation component over sentiment, as price expectations directly influence policy.
Contextual Factors
Recent Trends: May’s UoM sentiment hit a 2025 low (50.8), while 1-year inflation expectations spiked to 7.3% (later revised to 6.6%). June’s data will test whether inflation fears are easing.
Fed’s Focus: The Fed views inflation expectations as critical to actual inflation trends. A sustained rise above 6% could delay cuts despite softer CPI/PPI.
Broader Risks: Trade tensions (Trump’s tariffs) and political pressure on the Fed add volatility to dollar dynamics.
Conclusion
The dollar’s reaction hinges most critically on inflation expectations. A print above 6.6% would signal lingering price pressures, bolstering the Fed’s hawkish resolve and supporting DXY. Conversely, a drop below 6.0% could accelerate dollar selling as markets bet on earlier easing. Traders should also watch for revisions to May’s inflation expectations (previously revised down from 7.3% to 6.6%), which could amplify volatility.
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