US Dollar plummets to fresh weekly lows below 92
Despite some relatively robust macro data from the U.S., the US Dollar Index, which tracks the greenback against a basket of six trade-weighted peers, came under pressure in the NA session and fell to 91.96 to renew its lowest level since August 29. As of writing, the index was at 91.98, losing 0.35% on the day.
The Bank of Canada on Wednesday announced that it decided to raise its target for the overnight rate by 25 bps to 1% amid a stronger-than-expected economic performance, pushing the USD/CAD pair to its lowest level in more than two years. The fact that Canadian dollar is one of the currencies of which the exchange rate is factored in while calculating the US Dollar Index seems to be weighing on the DXY.
- Bullish Bank of Canada hikes rates again - ING
Moreover, Stanley Fischer, Vice Chairman of the Federal Reserve, announced his resignation in a letter on Wednesday, in which he said that his decision was based on personal reasons and that he was intending to leave his duty in mid-October. This development cast doubt over the possibility of the Fed Chairwoman Yellen being reappointed when her term expires in February.
- Fed Vice Chairman Fischer announces resignation, effective mid-October
Today's data from the U.S. showed that the trade deficit increased by less than expected on a monthly basis in July while the final service sector PMI readings released by the Markit and the ISM separately both revealed that the non-manufacturing business activity continued to expand at a faster pace compared to July.
- US: Goods and services deficit was $43.7 bln in July, up $0.1 bln from $43.5 bln in June
- US: Continued growth in the non-manufacturing sector at a faster rate - ISM
- US: August data signalled accelerated upturn in business activity across service sector
Technical outlook
A daily close below 92 (psychological level) could allow for further losses towards 91.55 (Aug. 29 low) and 91.00 (psychological level). On the upside, resistances could be seen at 92.70 (Sept. 5 high), 93.30 (Aug. 31 high) and 94.05 (Aug. 16 high).