- DXY clings to gains around 98.30.
- US 10-year yields recede from recent tops.
- Attention is now on Trump and trade.
The greenback keeps the bid tone unchanged on Tuesday and is now trading around 98.30 when measured by the US Dollar Index (DXY).
US Dollar Index bid ahead of Trump
The index has regained the upside so far on Tuesday, leaving behind Monday’s negative price action and once again testing recent tops in the 98.40 region, although a breakout of this area still remains elusive.
In the meantime, the focus of attention is now on the speech by President Trump later in the day, where he is expected to shed further details on the progress (or lack of it) of the ‘Phase One’ deal with China amidst speculations on the probable roll over of part of the existing tariffs.
In addition, President Trump could also comment on the most likely delay (of 6 months) in the imposition of US tariffs on imports of European cars and autoparts.
In the docket, the NFIB index surprised markets to the upside advancing to 102.4 during October, also up from September’s 101.8. On Wednesday, Chief Powell will testify before the Senate and US inflation figures for the month of October will be in centre stage.
What to look for around USD
DXY came under selling pressure after hitting multi-week highs in the 98.40 region on Friday. In the meantime, headlines from the US-China trade war should remain ruling the global sentiment, while the attention has now shifted to Trump’s speech later today and any remarks on the ‘Phase One’ deal. Later in the week, key data and Powell’s testimony should also help with the direction of the buck. On the broader view, the outlook on the greenback appears constructive on the back of the Fed’s renewed ‘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 0.09% at 98.30 and a break above 98.40 (monthly high Nov.8/12) would open the door to 99.25 (high Oct.8) and then 99.67 (2019 high Oct.1). On the flip side, immediate contention emerges at 97.93 (100-day SMA) seconded by 97.52 (200-day SMA) and finally 97.11 (monthly low Nov.1).
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