- The index climbs to fresh tops in the 95.15/20 band.
- US 10-year yields jump to session highs beyond 2.91%.
- US Non-farm Payrolls bettered estimates at 201K in August.
The US Dollar Index (DXY) has reverted the initial dip to sub-95.00 levels and is now navigating daily highs in the 95.30 area following auspicious results from the US labour market report.
US Dollar Index bid after data
The index quickly picked up pace after US Non-farm Payrolls came in above estimates for the month of August, showing the economy added 201K jobs vs. 191K initially estimated.
However, the most relevant news came from Average Hourly Earnings, rising above expectations at a monthly 0.4% and 2.9% on an annualized basis. It was the largest increase in the last 9 years.
In addition, the jobless rate stayed unchanged at 3.9%, a tad below forecasts that were expecting a drop to 3.8%.
Today’s robust results reinforce the view of further tightening by the Federal Reserve in the next months, with speculations on two more rate hikes (likely at the September and December meetings) growing bigger and thus adding extra legs to the buck. Currently, and according to CME Group’s FedWatch tool, the probability of a rate hike at the 26 September meeting is at 99%.
US Dollar Index relevant levels
As of writing the index is gaining 0.30% at 95.31 and a breakout of 96.04 (50% Fibo of the 2017-2018 drop) would open the door for 96.96 (2018 high Aug.15) and finally 97.87 (61.8% Fibo of the 2017-2018 drop). On the other hand, the next support lines up at 94.45 (low Aug.28) seconded by 94.20 (38.2% Fibo of the 2017-2018 drop) and then 94.08 (low Jul.26).
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