US Dollar Index consolidates post inflation run-up towards 93.00 amid sluggish session
|- DXY holds onto previous day’s recovery from weekly low.
- US inflation came in softer-than-expected in August but couldn’t beat tapering concerns.
- Market sentiment improves of late amid easing virus numbers, vaccine hopes.
- China data, risk catalysts can entertain traders ahead of US Industrial Production.
US Dollar Index (DXY) bulls take a breather at around 92.65 during the Asian session on Wednesday.
The greenback gauge witnessed a volatile session the previous day that initially saw a fresh weekly low before a firmer daily close, mainly due to the mixed concerns over the US Consumer Price Index (CPI) data. Also favored the quote were fears of hurricane Ida and covid.
The US CPI dropped the most since January on monthly basis to 0.3% versus 0.4% expected and 0.5% prior. The CPI ex Food & Energy also dropped below 0.3% expected and previous readings to 0.1% during August, marking the biggest fall in six months.
Even if the inflation numbers eased during August, market sentiment worsened amid chatters that the figures are still high enough to help the Fed hawks push for tapering when they meet next week
Elsewhere, virus woes remain on the table despite the recently easing covid figures, as well as the UK, Australia and the US push for faster jabbing. That reason could be linked to Goldman Sachs’s analysis suggesting that US President Biden’s six-pronged strategy to battle with the virus may not win.
It should be noted that the hurricane Ida and tropical storm Nicholas challenge US energy firm in the Gulf and weighs on the risk appetite as well.
That said, US 10-year Treasury yields consolidate the biggest daily loss in a month around 1.29% whereas the S&P 500 Futures print mild gains by the press time.
Moving on, US Industrial Production for August, expected to ease from 0.9% to 0.5%, could offer intermediate DXY moves ahead of Thursday’s key Retail Sales data. Also important will be the risk catalysts including chatters over US stimulus, COVID-19 and geopolitics.
Technical analysis
Unless refreshing the monthly low, currently around 91.95, US Dollar Index remains directed to a two-month-old horizontal resistance near 93.20.
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