US Dollar firmer, approaches 98.00 ahead of US data

The greenback, tracked by the US Dollar Index, has recovered the smile today and is now heading towards the 98.00 handle, or session tops.

US Dollar attention to data, Yellen

After yesterday’s pullback to the mid-97.00s, the index has now regained buying interest and is trading on a firmer footing around 7-month tops in the 98.00 neighbourhood.

Rising expectations of a Fed’s rate hike in December remain the sole driver behind the dollar’s rally for the time being. According to Fed Funds future prices, CME Group’s FedWatch tool now signals de probability of a rate hike by end of 2016 at 60%, regaining some points since yesterday.

All the focus today will be on the release of Retail Sales and the Consumer Sentiment gauge in light of the recent confirmation of the ‘data dependent’ stance by the Committee seen on the FOMC minutes on Wednesday.

In addition, market participants will also look for clues on monetary policy at today’s Boston Fed Conference, where Boston Fed E.Rosengren (voter, dovish) and Chair J.Yellen are due to speak.

US Dollar relevant levels

The index is advancing 0.38% at 97.89 and a break above 98.59 (high Mar.3) would open the door to 99.95 (high Jan.21) and the 100.60 (high Dec.3). On the downside, the initial support aligns at 97.47 (low Oct.12) ahead of 96.21 (20-day sma) and finally 95.23 (support line off 2016 low).