US dollar reacts to US presidential debate and upcoming data – London Business News | Londonlovesbusiness.com

The US dollar recorded some volatility as traders reacted to the US presidential debate between President Joe Biden and Donald Trump.

The debate tilted market expectations toward a Trump win, contributing to uncertainty. The euro-dollar pair could also remain exposed to political developments in France.

US Treasury yields saw a slight uptick as markets awaited critical inflation data and assessed the implications of the presidential debate. Two-year yields remain above the 4.70% mark, and 10-year yields were around the 4.3% level, although yields were relatively lower for June overall, but could remain exposed to political developments.

Attention now turns to today’s data. Key to the monetary policy direction is the May PCE price index which is expected to show a 0.1% increase on a monthly basis and an annual rate of 2.6%. While markets continue to see two interest rate cuts this year, lower-than-expected PCE data could increase the odds of an accommodative policy.

The greenback also maintained its strength against the Japanese yen, which tumbled to a 38-year low, hitting the 161-yen level, increasing speculation about possible intervention by Japanese authorities.