- DXY trades directionless in the mid-97.00s.
- US 10-year yields hover around the 1.70% area.
- US July Producer Prices next on the calendar.
The greenback, when measured by the US Dollar Index (DXY), is prolonging the sideline theme in the 97.50/60 region at the end of the week.
US Dollar Index focused on trade, yields
The index is showing some signs of stabilization in the mid-97.00 region at the end of the week, always closely following the performance of US yields and developments from the US-China front.
In fact, yields of the key US 10-year note tested the vicinity of 1.80% late on Thursday, although they lost some upside momentum afterwards.
Moving to the US-China trade war, no major headlines as of late other than negotiations between the White House and some US companies regarding the resumption of business with tech giant Huawei, all after China said it will halt its purchases from US farmers.
In the docket, Producer Prices for the month of July will be the sole publication later today in the US docket.
What to look for around USD
The fresh bout of US tariffs on Chinese products has undermined the Fed-led rally in the buck to levels last seen in May 2017 near 99.00 the figure, sparking a sharp leg lower to the area just above the critical 200-day SMA. By the same token, yields of the US 10-year benchmark have dropped to multi-year lows in the sub-1.60% area fuelled by the generalized ‘flight to safety” mood, always on the back of increasing jitters on the US-China trade war. Regarding the greenback, its demand appears propped up by its safe have appeal, the status of ‘global reserve currency’, solid US fundamentals and the less dovish stance from the Federal Reserve.
US Dollar Index relevant levels
At the moment, the pair is losing 0.02% at 97.55 and a breakdown of 97.21 (low Aug.6) would open the door to 96.93 (200-day SMA) and then 96.67 (low Jul.18). On the other hand, the next up barrier emerges at 97.85 (high Aug.7) seconded by 98.37 (monthly high May 23) and then 98.93 (2019 high Aug.1).
Share
