US dollar index: Correction continues, hits 2-week lows
|The US dollar is falling across the board on Monday. After a strong opening following the Italian referendum, the greenback reversed its trend and turned negative.
The DXY climbed to 101.55 during the Asian session but as market sentiment improved turned sharply to the downside. It broke below 100.60 (last week lows) and fell to 100.33, hitting the lowest level since November 16. It remains near the lows, under pressure as it continues its correction from 13-year highs.
The dollar index is falling for the third day in a row and, for the first time since US presidential elections, is below the 20-day moving average.
Fed talk and data
Economic data from the service sector in the US was mixed. The Markit PMI dropped from 54.7 to 54.6, against expectations of a rise to 54.9 while the ISM non-manufacturing climbed from 54.8 to 57.2, suppressing the 55.3 of market consensus.
Charles Evans, president of the Chicago Federal Reserve Bank said today that we are on the cusp of a period of rising interest rates and mentioned that the low unemployment rate means that there is less need for fiscal stimulus. While William Dudley, President of the New York Fed, saw a reduction in downside risks for the economy and mentioned that the US dollar is not a concern for him, arguing that is firm because people have confidence in the US economy.
The next FOMC meeting will take place next week and markets are discounting a rate hike.
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