- DXY loses further momentum and breaches 99.00.
- US Challenger Job Cuts shrunk to 41.557K in September.
- US ISM Non-manufacturing expected at 55.0.
The US Dollar Index (DXY), which measures the Greenback vs. a bundle of its main competitors, remains unable to spark any move higher and is now flirting with the key support at 99.00 the figure.
US Dollar Index remains offered ahead of data
The index is down for the third session in a row so far on Thursday, extending further the rejection from Tuesday’s 2019 highs near 99.70. The down move is now flirting with the 10-day SMA in levels just below the 99.00 mark.
Shrinking US yields are reflecting the quick deterioration of the sentiment around the buck, particularly after the manufacturing gauge tracked by the ISM dropped to a decade low during September (Tuesday).
Later in the session, Factory Orders, Durable Goods Orders and the more relevant ISM Non-manufacturing will be in the limelight. Earlier, Challenger Job Cuts dropped to 41.557K during last month; Initial Claims, in the meantime, rose by 219K on a weekly basis.
What to look for around USD
The index came under selling pressure after hitting fresh 2019 highs near 99.70 on Tuesday. Further out, the sentiment around the buck is looking to recover following the shocking results from the ISM manufacturing, although the prospect still looks constructive amidst a divided FOMC vs. a broad-based dovish stance from the rest of the G-10 central banks. In spite of some key fundamentals appear to have run out of steam in past months, the labour market remains strong as well as consumer spending, while the recent pick up in inflation adds to the auspicious domestic scenario vs. the generalized slowdown in most of overseas economies. Domestic data in combination with politics and developments from the US-China trade front should be key in determining the next decision on interest rates amidst Powell’s ‘mid-term adjustment’. Looking at the broader picture, the positive view on the Dollar is also well underpinned by its safe haven appeal and the status of ‘global reserve currency’.
US Dollar Index relevant levels
At the moment, the pair is losing 0.06% at 98.96 and faces immediate contention at 98.62 (21-day SMA) seconded by 98.23 (55-day SMA) and finally 97.86 (monthly low Sep.13). On the upside, a break above 99.67 (yearly high Oct.1) would aim for 99.89 (monthly high May 11 2017) and then 100.00 (psychological handle).
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