- US Dollar Index registers decline for the second consecutive day.
- Dimming prospects of US-China deal weigh on the greenback.
- The US Q3 employment data will be followed to confirm Friday’s strong jobs report.
The US Dollar Index (DXY), a gauge of the comparative US Dollar (USD) strength versus six major currencies, declines to 97.62 during the pre-European session on Tuesday. The greenback index witnessed a pullback on Monday after registering heavy gain following Friday’s upbeat employment data from the United States (US).
Be it mixed statements from the US and Chinese diplomats or trade war threats from Global Times, market players are putting a less trust on the Trump administration when it comes to the Chinese tariffs, up for activation on December 15. The latest trade-positive comments from the US Agricultural Secretary also failed to please the optimists. On the other hand, odds are rising for a trade deal between the US, Canada and Mexico.
In doing so, the market’s risk tone stays under pressure with the US 10-year treasury yields extending Monday’s drop to 1.814% by the time of writing.
The greenback gauge marked heavy gains on Friday after the November month employment data beat most positive expectations and surprised investors. However, those gains will now be rechecked in conjunction with today’s third-quarter (Q3) Nonfarm Productivity and Unit Labor Costs data. Forecasts suggest a recovery in Nonfarm Productivity to -0.1% from -0.3% while Unit Labor Costs could decline to 3.3% from 3.6%. Elsewhere, German and Eurozone ZEW data will also be in the spotlight.
Other than the economic calendar, trade/political headlines will also be the key to watch.
Technical Analysis
Following its pullback from 200-day Simple Moving Average (SMA), at 97.68 now, the greenback gauge could revisit last week’s low near 97.35. Alternatively, 98.00 could lure buyers past-200-day SMA.
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