US Dollar Index recedes from tops, stays above 97.00
- DXY fades the spike to daily highs near 97.30.
- Yields of the US 10-year note drop to lows near 2.03%.
- US-China trade talks expected to resume next week.
The US Dollar Index (DXY), which tracks the greenback vs. a basket of its main competitors, met fresh selling orders in the vicinity of 97.30.
US Dollar Index looks to trade, Fed
After challenging 2-day highs near 97.30, the index is now grinding lower albeit managing to keep business above the key barrier at 97.00 the figure.
The greenback appears to have shed some ground after another round of Trump’s criticism to the Fed’s policy. This time Trump pushed further for a larger rate cut at next week’s meeting.
On another front, US R.Lighthizer and S.Mnuchin will visit China next week in order to resume trade talks.
In today’s docket, the Chicago Fed Activity Index came in at -0.02 (vs. 0.10 forecasted), missing consensus and lower than May’s -0.03.
What to look for around USD
Speculations among investors have already priced in a 25 bps rate cut hits month, although a bigger rate cut still remains in the centre of the debate. Trade tensions, geopolitical jitters around the US and Iran and global growth concerns continue to cloud the US outlook while the lack of upside traction in inflation remains worrisome. Confronting this scenario, the greenback still looks underpinned by its safe have appeal, the status of ‘global reserve currency’, solid US fundamentals when compared to its G10 peers and the shift to a more accommodative stance from the rest of the central banks.
US Dollar Index relevant levels
At the moment, the pair is gaining 0.11% at 97.18 and faces the next resistance at 97.59 (high Jul.9) followed by 97.80 (monthly high Jun.3) and finally 98.37 (2019 high May 23). On the flip side, a break below 96.67 (low Jul.18) would aim for 96.46 (low Jun.7) and then 96.04 (50% Fibo of the 2017-2018 drop).