- DXY regains traction and advances to the 92.70 area.
- Pandemic, vaccines remain in the centre of attention so far.
- Initial Claims, Philly Fed Index next of note in the US calendar.
The greenback, when gauged by the US Dollar Index (DXY), reverses the recent leg lower and reaches multi-day tops in the 92.70/75 band on Thursday.
US Dollar Index focused on data, pandemic
After five consecutive daily pullbacks, the index finally manages to regain some composure and marches to the 92.70 area, or 3-day highs, in the second half of the week.
The dollar’s rebound appears sustained by a resurgence of some risk aversion among investors on the back of rising coronavirus cases across the world, while the optimism on news of potential vaccines looks somewhat mitigated.
In addition, uncertainty from the Brexit negotiations and potential political effervescence in Europe also collaborate with the prevailing cautious tone in the global markets and the renewed inflows into the buck.
Later in the docket, the usual weekly Claims will be in the limelight seconded by the Philly Fed and Kansas City manufacturing gauges, the CB’s Leading Index and the speech by Cleveland Fed L.Mester (voter, hawkish).
What to look for around USD
DXY’s downside halted just ahead of the 92.00 neighbourhood on some re-emergence of the risk-off sentiment. In the meantime, the dollar remains focused on the post-elections scenario and a the prospects of the US economy under the Biden administration. On the more macro view, the dollar keeps gauging the impact of the second wave of the pandemic on the global economy vs. extra progress regarding vaccines against the COVID-19. On another front, the “lower for longer” stance from the Federal Reserve is expected to keep limiting a potential serious upside in the dollar.
US Dollar Index relevant levels
At the moment, the index is gaining 0.37% at 92.66 and a breakout of 93.20 (weekly high Nov.11) would open the door to 93.67 (100-day SMA) and finally 94.30 (monthly high Nov.4). On the flip side, immediate contention emerges at 92.13 (monthly low Nov.9) followed by 91.92 (23.6% Fibo of the 2017-2018 drop) and then 91.80 (monthly low May 2018).
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