- DXY keeps the familiar range around 98.30.
- Skepticism around US-China trade stays on the rise.
- Retail Sales, Business Inventories, the NAHB index, Beige Book next on tap.
The Greenback, in terms of the US Dollar Index (DXY), is trading within a narrow range on Wednesday around the 98.30 area.
US Dollar Index looks to trade, data
The index faded Tuesday’s uptick to weekly tops around 98.60 following another bout of risk-on sentiment following rising hopes of a Brexit deal according to negotiations between the EU and the UK in past hours.
The better tone in the Dollar during the first half of the week tracked the fading optimism around the US-China partial trade deal reached at the end of last week and the persistent increase of skepticism among investors.
Later in the US docket, September’s Retail Sales will be the salient event seconded by the NAHB index, Business Inventories, TIC Flows and the publication of the Fed’s Beige Book.
In addition, Chicago Fed C.Evans (voter, centrist) will discuss Economy and Monetary Policy and FOMC’s L.Brainard (permanent voter, dovish) will speak at a Crypto Currency Conference.
What to look for around USD
DXY has managed to rebound from recent lows in the 98.20 region amidst some fresh jitters on the US-China trade front. Investors’ attention have now shifted to the increasing likeliness of another insurance cut by the Fed at the next meeting and its recently announced programme to expand the balance sheet via purchases of T-bills to remove pressure from the money markets. Despite evidence that the US economy could be losing some momentum, the labour market remains strong as well as consumer spending, although the latest mixed results from the CPI appear to support the view of extra cuts by the Fed in the near future. On the broader view, the constructive outlook in DXY looks a bit damaged but it still is in play amidst a divided FOMC vs. a broad-based dovish stance from the rest of the G-10 central banks. In addition, the positive view on USD remains well sustained by its 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 98.32 and a breakout of 98.78 (21-day SMA) would open the door to 99.25 (high Oct.9) and then 99.67 (2019 high Oct.1). On the other hand, the next support emerges at 98.20 (monthly low Oct.11) seconded by 97.86 (monthly low Sep.13) and then 97.80 (100-day SMA).
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