US Dollar eases off multi-week highs, stays above 95
|- 10-year T-bond yield pulls away from 3% mark.
- Wall Street turns positive after starting the day mixed.
The US Dollar Index, which tracks the greenback against a basket of six major currencies, rose to its highest level since June 19 at 95.52 on Monday. Although the index retraced a portion of its daily gains during the first half of the NA session, it didn't have a difficult time staying in the positive territory. At the moment, the DXY was up 0.2% on the day at 95.35.
The lack of fundamental drivers on Monday supported the greenback's rise as investors continued to price two more rate hikes in the remainder of the year following last Friday's employment report. Despite a less-than-expected increase in nonfarm payrolls in July, the wage inflation remained steady at 2.7% on a yearly basis and the unemployment ticked down to 3.9%. Moreover, both May's and June's NFP readings got revised up.
According to the CME Group FedWatch Tool, the probability of a 25 bps rate hike in September is now at 93.6% and the odds of one more rate hike in December is 66.7% compared to 65.1% on August 3.
In the meantime, the 10-year T-bond yield, which tested the 3% handle last week, extended lower to 2.925% on Monday, making it difficult for the greenback to continue to gather strength against its peers.
There won't be any macroeconomic data releases from the U.S. on Monday and investors will be waiting for tomorrow's JOLTS Job Openings and consumer credit change data.
Technical outlook
The initial resistance for the index is seen at 95.50 (daily high) ahead of 96 (psychological level) and 96.50 (Jul. 5, 2017, low). On the downside, supports are located 95 (psychological level), 94.50 (50-DMA) and 94.10 (Jul. 26 low).
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