US Dollar Index regains some traction near 93.00
- DXY reverses the recent weakness and approaches 93.00.
- US 10-year yields remain side-lined below 1.30%.
- MBA Mortgage Applications, Durable Goods Orders, EIA next on tap.
The greenback, in terms of the US Dollar Index (DXY), manages to leave behind the recent bearish note and trades closer to the 93.00 neighbourhood.
US Dollar Index cautious ahead of Jackson Hole
After three consecutive daily pullbacks, the index now regains some composure and flirts with the key barrier around 93.00 amidst steady yields and rising cautiousness ahead of the speech by Fed’s Powell at the Jackson Hole Symposium on Friday.
Indeed, investors are expected to closely follow the event looking for any hints from Chief Powell regarding the potential timing of the QE tapering as well as the march to a “substantial further progress” in the economy.
US 10-year yields, in the meantime, extend the consolidative mood, always below the key 1.30% yardstick.
Later in the US data space, the Durable Goods Orders will be in the limelight along with the weekly Mortgage Applications by MBA and the EIA’s report on crude oil inventories.
What to look for around USD
After recording new 2021 highs in the 93.70 region last week, the dollar sparked a corrective downside that met decent contention near 92.80 for the time being. The constructive performance of the dollar, in the meantime, has been further reinforced following the publication of the FOMC Minutes, where the Committee acknowledged that the QE tapering is closer than previously expected and the “sustained further progress” in the labour market still needs to be met in spite of the persistent economic recovery. Further support for the buck comes in the form of fresh coronavirus concerns, high inflation, higher real yields and the soft note in the risk complex.
Key events in the US this week: Durable Goods Orders (Wednesday) – Flash Q2 GDP, Initial Claims (Thursday) – Jackson Hole Symposium, PCE, Personal Income/Spending, Advanced Goods Trade Balance, Final Consumer Sentiment (Friday).
Eminent issues on the back boiler: Biden’s multi-billion plan to support infrastructure and families. US-China trade conflict under the Biden’s administration. Tapering speculation vs. economic recovery. US real interest rates vs. Europe. Debt ceiling debate. Potential hint at the timing of QE tapering at the Jackson Hole Symposium. Geopolitical risks stemming from Afghanistan.
US Dollar Index relevant levels
Now, the index is gaining 0.13% at 93.00 and a break above 93.72 (2021 high Aug.20) would open the door to 94.00 (round level) and then 94.30 (monthly high Nov.4 2020). On the other hand, the next support comes in at 92.80 (weekly low Aug.24) followed by 92.47 (low Aug.13) and finally 91.78 (monthly low Jul.30).