US Dollar Index stays depressed near the 92.50 region, data in sight
- DXY remains under pressure in the mid-92.00s.
- Yield of the key US 10-year note stay side-lined around 1.30%.
- Initial Claims, Factory Orders, Balance of Trade next on tap.
The greenback, when tracked by the US Dollar Index (DXY), keeps the subdued performance around the 92.50 region, a tad above recent lows in the 92.40/35 band (Wednesday).
US Dollar Index focused on data
The index extends the downside for the third session in a row on Thursday, always on the back of steady yields, mixed data results and rising cautiousness ahead of the Nonfarm Payrolls release on Friday.
In fact, Wednesday’s disappointing figures from the ADP report (+374K) appear to have poured cold water over expectations of a positive outcome at Friday’s labour market report despite the doubtful link between the two releases.
Indeed, auspicious results from the Nonfarm Payrolls should encourage investors – and the dollar – to start pricing in a potential announcement regarding the QE tapering at this month’s meeting, while another fiasco is seen just postponing the debate for later meetings (November/December). Again, not a matter of “if”, but of “when”.
On another front, yields of the 10-year benchmark navigate a rangebound theme near 1.30%, while yields of the 2-year note hover around the 0.21%.
Later in the NA session, Challenger Job Cuts are due in the first turn seconded by usual weekly Claims, Balance of Trade results and July’s Factory Orders.
What to look for around USD
The index extended the post-Powell selloff to fresh lows in the 92.40/35 band, where some contention seems to have turned up. In the meantime, support for the buck is expected to come in the form of coronavirus concerns, the uptrend in inflation and high real yields, while upcoming key data releases are predicted to have a crucial role in the timing of the start of the QE tapering.
Key events in the US this week: Balance of Trade, Initial Claims, Factory Orders (Thursday) – Nonfarm Payrolls, ISM Non-Manufacturing (Friday).
Eminent issues on the back boiler: Biden’s multi-billion plan to support infrastructure and families. US-China trade conflict under the Biden’s administration. Tapering speculation vs. economic recovery. US real interest rates vs. Europe. Debt ceiling debate. Geopolitical risks stemming from Afghanistan.
US Dollar Index relevant levels
Now, the index is losing 0.08% at 92.42 and faces the next support at 92.37 (weekly low Sep.1) followed by 91.78 (monthly low Jul.30) and finally 91.62 (100-day SMA). On the upside, a break above 92.89 (20-day SMA) would open the door to 93.72 (2021 high Aug.20) and then 94.30 (monthly high Nov.4 2020).