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June 16, 2021

USD Ready for FOMC Policy Decision

 The movement of the US dollar was again limited in the Asian session after rising to a one -month high against a basket of major currencies in the past, driven by data showing rising inflation.

As expected by the market ahead of the monetary policy announcement on Wednesday, US retail sales data showed a more -than -expected decline in May, driven by consumer spending shifting to services rather than goods.

However, the rise in the producer price index, which is a measure of inflation, indicates strong demand as more economic sectors reopen and indicates that there is an increase in price pressures.

Following that, the 10 -year US treasury yield continued to maintain its strengthening momentum by rising more than 1.51% after the release of the data, before declining slightly in the Asian session around 1.49%.

The dollar index traded back around the same price at 90.55, after rising higher in the previous session.

Market sentiment tended to be cautious as investors awaited the monetary policy announcement in the early hours of Thursday morning (Malaysian time).

While the central bank is expected to continue to maintain its interest rates until 2023, there are expectations that discussions on a reduction in its monthly bond purchases will resonate.