US Dollar stays around 96.80 post-US data

The US Dollar Index – which gauges the buck vs. its main rivals – keep the positive note at the beginning of the week, although retreating from earlier daily highs.

US Dollar gains capped below 97.00

The index shrugged off Friday’s poor payrolls figures and has started the week on a better mood, advancing towards the key barrier at 97.00 the figure albeit losing some momentum soon afterwards.

USD stayed mostly apathetic after US factory orders contracted 0.2% on a monthly basis in April, while the key ISM non-manufacturing ticked lower to 56.9 for the month of May vs. 57.0 forecasted and April’s 57.5.

Further data saw Markit’s manufacturing PMI missing estimates at 53.6, unit labor costs rising 2.2% in Q1 and non-farm productivity coming in flat during the same period.

In the meantime, the index lost some upside momentum after reaching session highs, correcting lower in tandem with US yields. The 10-year benchmark dropped to the current 2.17% area after briefly testing the boundaries of 2.19%. The probability of a rate hike by the Federal Reserve at the June 14-15 meeting stays at almost 96% when tracked by the CME Group’s FedWatch tool.

On the positioning front, the speculative community kept scaling back its USD net longs, this time to the lowest since early October 2016 during the week ended on May 30 and according to the latest CFTC report.

US Dollar relevant levels

The index is advancing 0.21% at 96.81 and a breakout of 97.26 (high Jun.2) would open the door to 97.70 (high May 30) and then 97.73 (20-day sma). On the flip side, the immediate support is located at 96.61 (2017 low Jun.2) followed by 95.91 (low Nov.9 2016) and finally 94.95 (low Sep.22 2016).