Dollar heads to biggest monthly loss since 2018 on US rate cut bets

The US dollar fell on the European market on Friday against a basket of global currencies to resume its losses which were temporarily halted as part of a three-day bounce from its three-month low, while about to make the biggest monthly loss since January 2018, due to increased prospects about a future US interest rate cuts at next month's FOMC meeting and ahead of key US economic data on consumer spending levels.

The dollar index fell more than 0.1% to 96.06 points, from the opening level of 96.19 points, with the highest level at 96.25 points.

Yesterday, the index rose by less than 0.1%, its third consecutive daily gain, with the retreat from a three-month low of 95.84 points.

Over the course of June, the dollar index lost 1.5%, about to incur the first monthly loss in the last five months, and the biggest monthly loss since January 2018, due to strong prospects for US interest rate cuts.

The US central bank said last week that interest rate cuts prospects are on the rise, boosting the possibility of easing monetary policy at the July meeting, to help the bank to combat growing global and domestic risks.

The global risk is the US trade wars with several countries, led by China and the domestic ones are centered on the mounting concerns about weak inflation levels in the country.

While the Federal Reserve dropped the phrase "patience approach" when changing interest rates from the monetary policy statement, and stressed to take what is necessary to maintain economic growth in the country, and showed that about a half of its members are ready to reduce borrowing costs in the next few months.

Investors are waiting for the release of the Personal Spending Index for May, which is expected to rise by 0.5% from a 0.3% rise in April and the Personal Income Index for the same month expected to rise by 0.3% from a 0.5% increase the previous month.

The Core Personal Consumption Expenditure Index, is expected to rise by 1.5% in May, the same as previous reading.

Federal Reserve monetary policy makers rely heavily on these data to draw a clear picture of the pace of inflation in the country.