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  • Philly Fed Manufacturing Survey disappoints on Thursday.
  • The U.S. is preparing new sanctions against Turkey.

The US Dollar Index, which tracks the greenback against a basket of six major currencies, spent the first half of the day correcting its latest rally. After touching a daily low at 96.32, the index went into a consolidation phase near mid-96s but gained traction in the late NA session to retrace the majority of its daily losses. At the moment, the index is down 0.06% on the day at 96.65.

Today’s data from the U.S. showed that the weekly initial jobless claims edged down to 212K from 214K and building permits increased by 1.5% compared to markets’ expectation of 1.4%. On a negative note, the Philadelphia Fed’s Manufacturing Survey pointed to a slowdown in the business activity in that sector with the headline index falling to 11.9 in August from 25.7 in July. Moreover, housing starts only rose 0.9% to miss the analysts’ estimate of 7.4% by a wide margin.

Although it looked like the DXY was heading for a negative daily close, resurfacing political tensions between the U.S. and Turkey provided a boost to the greenback. The U.S. Treasury Secretary, Steven Mnuchin, said that they were getting ready to impose new sanctions in Turkey if they didn’t release pastor Brunson. President Trump added, “Turkey ‘hasn’t turned out to be a great friend.’ The index quickly recovered toward the 96.70 region to turn flat on the day before retreating slightly.

Technical outlook

The initial resistance for the index could be seen at 97 (psychological level) ahead of 97.50 (Jun. 26, 2017, high) and 97.90 (Jun. 20, 2017, high). On the downside, supports could be seen at 96.30 (daily low), 95.30 (20-DMA) and 94.80 (50-DMA).