US dollar index in holiday mode, ends week near 103.00

The US dollar index is about to end Friday flat and marginally higher for the week, up 0.15% from the level it had seven days ago. The DXY reached on Tuesday a 14-year high at 103.57 and then pulled back to the 103.00 area.

Market activity remained quiet on Friday ahead of holidays. Greenback rose against commodity currencies and the pound but fell versus the euro and particularly the yen. The Japanese currency was the best performer of the week. 

Economic data from the US on Friday did not help the US dollar despite positive number. Consumer sentiment rose to 98.2 (above the 98.0 expected) while new home sales also surpassed expectation and climbed 5.2% in November. 

“Consumer's views of future economic conditions both improved suggesting momentum behind consumer spending going into 2017”, said analyst from Well Fargo. Regarding new home sales, they added: “Sales were likely bolstered by unusually mild weather, particularly in the Midwest, where most of November's gain occurred. Sales also rose in the West.”

Levels to watch

The DXY is about to post the highest weekly close in years. The trend continues to favor the upside. The greenback is still receiving support from Federal Reserve rate hike expect ions. During the week US bonds corrected modestly to the upside, with yields falling moderately. 

In Wall Street, the Dow Jones was falling marginally on Friday (-0.05%), but it was still up for the week (+0.25%) about to end around the 19,900 zone. The stock index failed to reach the 20,000 mark during the week; on Tuesday printed a new record high at 19,987 

The US dollar index continues to consolidate around the 103.00 handle, holding to most of the gains that followed the rate hike from the Federal Reserve. It could continue to trade around current levels at the beginning of next week, considering that most financial markets will remain closed. 

To the upside, resistance might be seen at 103.15/20 (Dec 21 &23 high), 103.55/60 (Dec 20 high) and 104.00 (psychological). On the downside, support levels might lie at 102.50/55 (Dec 22 low), 102.45 (Dec 19 low) and 102.00 (psychological). 

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