- DXY grinds lower and tests 98.30, daily lows.
- Yields of the US 10-year note dropped below 1.76%.
- US Philly Fed bettered estimates in September.
The Greenback, when gauged by the US Dollar Index (DXY), remains well on the defensive today and is now approaching the 98.30 region, or daily lows.
US Dollar Index weaker despite data
The index has now come under further selling pressure despite positive results from today’s docket.
In fact, the key Philly Fed manufacturing index came in above estimates at 12.0 for the current month, although a tad lower than the August’s print. Further releases saw weekly Claims rising by 206K and Existing Home Sales expanding by 5.49 million units during last month, both readings coming in above consensus.
The fresh downtrend in the buck comes along a drop in yields of the SU 10-year benchmark to the 1.76% region, around 15 bps lower than recent tops.
What to look for around USD
DXY keeps the trade within range so far while markets digest the FOMC event and assess another rate cut under the ‘mid-cycle adjustment’. Domestic data in combination of political 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. 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 buck’s safe haven appeal and the status of ‘global reserve currency’. Against this backdrop, the slowdown persists in overseas economies while central banks stick to a more aggressive dovish bias.
US Dollar Index relevant levels
At the moment, the pair is losing 0.26% at 98.29 and faces immediate contention at 97.86 (monthly low Sep.13) followed by 97.59 (100-day SMA) and finally 97.17 (low Aug.23). On the upside, a break above 99.10 (high Sep.12) would aim for 99.37 (2019 high Sep.3) and then 99.89 (monthly high May 11 2017).