- DXY stays directionless at the beginning of the week.
- Attention remains on US-China trade war.
- Preliminary PMIs, Fedspeak next of relevance today.
The Greenback, in terms of the US Dollar Index (DXY), is trading within a tight range at the beginning of the week around the 98.50 region.
US Dollar Index focused on data, Fedspeak
The index has started the week on a neutral note in the mid-98.00s following the lack of news on the US-China trade front ahead of key high-level talks expected to resume in Washington early next month.
In the meantime, the Greenback keeps holding on to the 98.50 region amidst the ongoing correction lower in US yields, all following another rate cut by the Federal Reserve last Wednesday.
Later in the NA session, the Chicago Fed National Activity Index is due along with advanced prints for Markit’s Manufacturing and Services PMIs for the current month.
In addition New York Fed J.Williams (permanent voter, centrist) will speak at the Treasury Market Conference, San Francisco Fed M.Daly (2021 voter, centrist) will speak at the Conference on Economic Opportunities and St. Louis Fed J.Bullard (voter, dovish) will discuss US Economy and Monetary Policy.
What to look for around USD
The index has been managing well to keep the trading range above the 98.00 barrier in past sessions. Market participants have already digested the recent FOMC event and appear to have shifted their focus to the US-China trade war once again. Domestic data in combination with politics and trade developments should be key in determining the next decision on rates after Fed’s Powell left the door open for extra easing along the road. However, the increasing dissent among FOMC members casts further clouds on the probability of extra stimulus at the upcoming meetings, leaving the outlook on interest rates quite mixed, to say the least. Looking at the broader picture, the positive view on the Dollar is still well underpinned by the solid US labour market, strong consumer confidence and spending and the auspicious pick up in consumer prices, all adding to the safe haven appeal and the status of ‘global reserve currency’.
US Dollar Index relevant levels
At the moment, the pair is gaining 0.01% at 98.48 and a break above 99.10 (high Sep.12) would aim for 99.37 (2019 high Sep.3) and then 99.89 (monthly high May 11 2017). On the downside, immediate contention emerges at 97.86 (monthly low Sep.13) followed by 97.61 (100-day SMA) and finally 97.17 (low Aug.23).
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