US Dollar Index pushes higher and records new 2021 highs near 93.90
- DXY advances further and approaches the 94.00 level.
- US 10-year yields retreat from tops around 1.56%.
- J.Powell will participate in a policy panel at the ECB Forum.
The greenback pushes higher and clinches new 2021 highs around 93.90 when gauged by the US Dollar Index (DXY) on Wednesday.
US Dollar Index looks to yields, Powell
The index adds to recent gains and trades closer to the key 94.00 yardstick midweek on the back of the persevering selling pressure in the risk-linked galaxy.
The move higher in the dollar to levels last seen in November 2020 was against the backdrop of the moderate rally in US yields, with the short end of the curve hovering around recent tops near 0.30% and the belly testing the area above 1.55%, or 3-month peaks.
In the meantime, the rally in the dollar remains underpinned by the latest hawkish message from Chief Powell at the FOMC event, with a clear impact on yields along the curve despite fundamentals continues to send mixed signals regarding the economic recovery.
Later in the US data space, MBA Mortgage Applications are due seconded by Pending Home Sales and the speech by the Philly Fed P.Harker (2023 voter, hawkish).
However, the salient event will be the participation of Chief Powell at a policy panel at the ECB Forum in Sintra along with ECB’s Lagarde, BoJ’s Kuroda and BoE’s Bailey.
What to look for around USD
The index clinches fresh 2021 tops around 93.80 on Tuesday, always against the backdrop of the hawkish message from Chief Powell, prospects for an interest rate hike by end of 2022 and the sharp move higher in US yields. Positive results from US fundamentals coupled with alleviating concerns regarding the progress of the Delta variant should also add to the constructive view of the dollar in the near/medium term.
Key events in the US this week: Powell’s speech (Wednesday) – Final Q2 GDP, Initial Claims (Thursday) – PCE, Final Manufacturing PMI, ISM Manufacturing, Personal Income/Spending, final Consumer Sentiment (Friday).
Eminent issues on the back boiler: Biden’s multi-trillion plan to support infrastructure and families. US-China trade conflict under the Biden’s administration. Tapering speculation vs. economic recovery. Debt ceiling debate. Geopolitical risks stemming from Afghanistan.
US Dollar Index relevant levels
Now, the index is gaining 0.16% at 93.86 and a break above 94.00 (round level) would open the door to 94.30 (monthly high Nov.4 2020) and then 94.63 (monthly high Sep.25 2020). On the flip side, the next down barrier emerges at 93.52 (weekly high Sep.23) seconded by 92.78 (55-day SMA) and finally 91.94 (monthly Sep.3).