- DXY falls further and tests the 96.60 area.
- US Payrolls came in at 75K in May.
- Average Hourly Earnings rose less than expected.
The US Dollar Index (DXY), which measures the greenback vs. a bundle of its main competitors, is now accelerating the downside to the 96.60 region in the wake of the poor results from the US labour market.
US Dollar Index weakens post-data
The index is navigating the area of multi-month lows in the 96.60/55 band after May’s Payrolls showed the economy added just 75K jobs and Average Hourly Earnings – a proxy for wage inflation – expanded at a monthly 0.2%, both prints missing consensus big time.
On the somewhat positive side, the unemployment rate stayed put at 3.6%.
DXY rapidly broke below weekly lows to levels last seen in mid/late- March around 96.60 in tandem with the sharp drop in yields of the key US 10-year reference to sub-2.07% levels, area last visited in September 2017.
What to look for around USD
Markets’ idea of a probable rate cut by the Federal Reserve in the near to medium term has just been boosted following the miserable prints from the US labour market. In addition, US-China trade jitters remain everything but abated so far with the focus of attention now moving to the upcoming G20 meeting in Japan, where the issue will take centre stage.
US Dollar Index relevant levels
At the moment, the pair is losing 0.37% at 96.63 and a breach of 96.59 (low Jun.7) would open the door for 96.48 (200-day SMA) and then 95.82 (low Feb.28). On the flip side, the next resistance is located at 97.44 (55-day SMA) seconded by 98.28 (high May 30) and finally 98.37 (2019 high May 23).
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