US Dollar Index faltered ahead of 94.50 ahead of Powell, data
- The rally in DXY run out of steam in the vicinity of 94.50.
- US 10-year yields post mild gains near the 1.54% level.
- Final Q2 GDP, weekly Claims, Fedspeak next on tap.
The greenback, in terms of the US Dollar Index (DXY), trades without clear direction near 94.30 on Thursday.
US Dollar Index supported by risk-off, yields
The index now faces some selling pressure after hitting new 2021 highs in the proximity of the 94.50 region on Wednesday, levels last seen in September 2020.
The uninterrupted push higher in US yields across the curve sustained the intense gain in the dollar during past sessions, particularly exacerbated after the hawkish message from Chief Powell at the FOMC event last week.
Also collaborating with the upbeat mood in the buck appear bouts of risk aversion and persistent jitters surrounding the US economic recovery.
Later in the calendar, the focus of attention will be on the release of the final Q2 GDP prints along with usual Initial Claims and the Chicago PMI. In addition, NY Fed and permanent voter J.Williams (centrist), Atlanta Fed R.Bostic (voter, centrist) and Philly Fed P.Harker (2023 voter, hawkish) are all due to speak.
Once again, Chief Powell will testify on the “Coronavirus and the CARES Act”, this time before the Committee on Financial Services at the House of Representatives.
What to look for around USD
The index finally surpassed the 94.00 mark and clinched fresh 2021 highs just below 94.50 on Wednesday, always in tandem with markets’ adjustment to prospects for a “soon” start of the tapering process, probable rate hikes at some point during next year and the march 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: 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 losing 0.09% at 94.27 and a break above 94.43 (2021 high Sep.29) would open the door to 94.74 (monthly high Sep.25 2020) and then 95.00 (round level). On the flip side, the next down barrier emerges at 93.72 (weekly high Aug.20) seconded by 92.82 (55-day SMA) and finally 91.94 (monthly Sep.3).