- The index comes down after reaching weekly highs near 97.70.
- Yields of the US 10-year note met support near 2.36%.
- Philly Fed index, Building Permits, Housing Starts next on tap.
The greenback, in terms of the US Dollar Index (DXY), is struggling for direction in the mid-97.00s after climbing as high as the 97.70 region on Wednesday.
US Dollar Index focused on trade, data
The weekly rally in the index seems to have met quite a tough barrier in the 97.70 region, always amidst trade concerns, declining US yields and potential implementation of tariffs on auto imports.
In fact, poor data from retail sales and industrial production published yesterday have prompted fears of a rate cut by the Federal Reserve via the moderate drop in US yields, with the 2-year note dropping to the lowest level in 15 months.
Furthermore, DXY managed to regain some ground after President Trump said any decision regarding the implementation of tariffs on US imports of cars and parts will be delayed by around 6 months.
Today’s US docket highlights the Philly Fed index, seconded by Housing Starts and Building Permits and usual Initial Claims. In addition Minneapolis Fed N.Kashkari (2020 voter, dovish) will discuss Monetary Policy and the Economy.
What to look for around USD
The centre of the debate for the greenback has shifted to the US-China trade dispute, although a high degree of uncertainty as well as caution among investors seem to prevail for the time being. On another direction, the lack of traction in US inflation – and concerns among Fed members – keeps weighing on the buck and threatens its underlying positive prospect. Occasional drops in the greenback, however, are seen shallow as the index stays supported by overseas weakness, the safe haven appeal, favourable yield spreads vs. the Fed’s G10 peers and the status of global reserve currency.
US Dollar Index relevant levels
At the moment, the pair is losing 0.04% at 97.52 and a breach 97.03 (low May 13) would expose 96.74 (100-day SMA) and finally 96.33 (200-day SMA). On the upside, the next up barrier is located at 97.70 (high May 15) seconded by 98.10 (high May 3) and finally 98.32 (2019 high Apr.25).
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