- DXY trades without direction above the 99.00 handle.
- US Core PCE rose 0.1% MoM and 1.8% YoY.
- Yields of the US 10-year note ease from tops near 1.73%.
The US Dollar Index (DXY), which tracks the buck vs. a basket of its main rivals, is trading in a volatile fashion but manages well to keep business above the 99.00 handle for the time being.
US Dollar Index apathetic on data, looks to trade, Trump
The index is trying to extend the positive streak for another session on Friday, although it remains well into the positive ground for the second consecutive week.
Expectations of a positive outcome at the upcoming US-China trade talks have been sustaining the upbeat tone in the riskier assets. The better mood also lent extra oxygen to the rebound in US yields and collaborated further with the Dollar’s up move.
In the data space, the Greenback saw its upside momentum falter following mixed results in today’s docket: while Durable Goods Orders surpassed expectations, inflation gauged by the PCE came in on the soft side and Personal Income/Spending failed to surprise investors to the upside.
Closing the weekly calendar, the final U-Mich print for the month of September is due.
What to look for around USD
Market participants have already digested the recent FOMC event and appear to have shifted their focus to the US-China trade war once again. Domestic data in combination with politics and trade developments should be key in determining the next decision on rates after Fed’s Powell left the door open for extra easing along the road. However, the increasing dissent among FOMC members casts further clouds on the probability of extra stimulus at the upcoming meetings, leaving the outlook on interest rates quite mixed, to say the least. Looking at the broader picture, the positive view on the Dollar is still well underpinned by the solid US labour market, strong consumer confidence and spending and the auspicious pick up in consumer prices, all adding to the safe haven appeal and the status of ‘global reserve currency’.
US Dollar Index relevant levels
At the moment, the pair is losing 0.03% at 99.17 and faces immediate contention at 97.86 (monthly low Sep.13) followed by 97.67 (100-day SMA) and finally 97.17 (low Aug.23). On the other hand, a breakout of 99.28 (high Sep.26) would aim for 99.37 (2019 high Sep.3) and then 99.89 (monthly high May 11 2017).
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