US Dollar Index approaches 96.00, session tops
- The index trades in daily highs in the 95.90 area.
- Yields of the US 10-year note navigate the 3.23% region.
- Italy, China expected to drive the sentiment ahead in the day.
The US Dollar Index (DXY), which tracks the greenback vs. a basket of its main rivals, has started the week on a positive note and is now approaching the key 96.00 handle.
US Dollar Index up by risk-off sentiment
A pick up in the effervescence around the Italian fiscal front, another cut in the RRR by the PBoC over the weekend and markets leaning towards the risk-off mood so far are all sustaining the generalized bid tone around the buck.
The PBoC cut its RRR over the weekend in order to boost liquidity, although the central bank has ruled out this move could morph into further Yuan depreciation and thus increase jitters in the US-China trade front.
In the meantime, the buck appears well bid in the wake of mixed results from September’s Payrolls published last Friday. In this regard, Senior Market Analyst at FXStreet Joseph Trevisani noted “ There is little in this report to dissuade the Fed from continuing its projected rate path. Remember, the Fed is not tightening to choke off future inflation, or curtail excessive growth, at least not yet, but to return interest rates to a more 'normal' level. What the normal or neutral level might be in relation to economic growth is uncertain”.
Recall that the US economy added 134K jobs in September, the unemployment rate ticked to the lowest level since 1969 at 3.7% and wage inflation eased a tad from August’s prints. “The large upward revision to August payrolls, from 201,000 to 270,000 takes some of the sting out of the September number. Taken together the total of 404,000 is slightly above the recent average”, Trevisani added.
US Dollar Index relevant levels
As of writing the index is up 0.29% at 95.92 and faces the next hurdle at 96.12 (high Oct.4) seconded by 96.98 (2018 high Aug.13) and finally 97.87 (61.8% Fibo retracement of the 2017-2018 drop). On the other hand, a break below 95.22 (10-day SMA) would aim for 94.90 (21-day SMA) and then 93.81 (low Sep.17).