- DXY is up smalls around the 98.00 area.
- Markit’s flash Manufacturing PMI due later along with U-Mich.
- Trade concerns remains driving the global mood.
The greenback alternates gains with losses at the end of the week around the 98.00 area when measured by the US Dollar Index (DXY).
US Dollar Index now looks to data
DXY is struggling to close the week in the positive territory against the backdrop of alternating risk-appetite trends, always tracking headlines from the US-China trade war.
Indeed, and according to latest news, President Trump has (once again) reiterated that a deal looks closer, although at the same time he warned China’s Xi against sending soldiers to Hong Kong, keeping the effervescence well and sound.
In the meantime, usual trade jitters keep the demand for the Fixed Income space firm, at the same time dragging yields lower on both sides of the ocean and motivating the US-German yield spread on the 10-year note to drop to levels last seen in February 2018 around 210 pts.
In the US calendar, Markit will publish its estimates for the manufacturing and services PMIs for the current month later in the session seconded by the release of the final print of the US Consumer Sentiment gauged by the U-Mich index.
What to look for around USD
The index seems to have met solid contention in the 97.70 region so far this week. In the meantime, headlines from the US-China trade dispute are expected to remain as the exclusive driver when comes to price action in the global markets, while investors keep monitoring US fundamentals amidst the ‘wait-and-see’ stance from the Federal Reserve and the steepening of the 2y-10y yield curve seen as of late. Moving to US politics, markets keep ignoring developments from the Trump’s impeachment process, while the impact on the FX space remains muted so far. On the broader view, however, the outlook on the greenback still looks constructive on the back of the Fed’s ‘wait-and-see’ mode vs. the dovish stance from its G10 peers, the dollar’s safe haven appeal and the status of ‘global reserve currency’.
US Dollar Index relevant levels
At the moment, the pair is gaining 0.03% at 98.03 a breakout of 98.45 (monthly high Nov.13) would open the door to 99.25 (high Oct.8) and then 99.67 (2019 high Oct.1). On the other hand, immediate contention is located at 97.68 (monthly low Nov.18) seconded by 97.57 (200-day SMA) and finally 97.11 (monthly low Nov.1).
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