US Dollar Index flat around 98.20, focus on trade, Jackson Hole
|- DXY trades unchanged around 98.20 on Monday.
- Yields of the US 10-year note rebound to 1.59%.
- Markets’ attention stay with trade, Jackson Hole, data.
The Greenback, in terms of the US Dollar Index (DXY), is alternating gains with losses within a narrow range at the beginning of the week around the 98.20 region.
US Dollar Index now looks to Jackson Hole
The upside momentum in the index is losing some traction on Monday, although the Greenback manages well to keep business above the key barrier at 98.00 the figure.
Markets have ignored further trade rhetoric by President Trump so far, this time casting doubts over the ability of both parties to reach a deal in the near/medium term.
Other than trade jitters, geopolitical noise stemming from Hong Kong is likely to attract investors’ attention as the issue remains far from resolved.
Events-wise, the Jackson Hole Symposium on 22-24 August will gyrate around ‘Challenges for Monetary Policy’, while all eyes are expected to be on Chief Powell’s speech on Friday.
News from the speculative community notes USD net longs receded to three-week lows during the week ended on August 13, according to the latest CFTC report. The ‘flight-to-safety’ context appears to have weighed on the buck in favour of JPY and bonds.
In the US data space, the housing sector will remain in the limelight this week along with usual Initial Claims, advanced PMIs for the current month and the FOMC minutes.
What to look for around USD
The main focus this week will be on the Jackson Hole Symposium as well as on any hint on the Fed’s plan for the next months. In the meantime, trade concerns, while still unabated and in combination with the current inversion of the yield curve, carry the potential to spark further ‘insurance cuts’ by the Federal Reserve and thus undermine the constructive prospects of the buck in the next months. Opposed to this view emerges the Greenback’s safe have appeal, the status of ‘global reserve currency’, so far solid US fundamentals vs. overseas economies and the less dovish stance from the Federal Reserve (as per the latest FOMC event).
US Dollar Index relevant levels
At the moment, the pair is flat at 98.21 and faces the next resistance at 98.37 (monthly high May 23) followed by 98.93 (2019 high Aug.1) and the 99.89 (monthly high May 2017). On the other hand, a break below 97.83 (21-day SMA) would aim for 97.21 (low Aug.6) and then 96.97 (200-day SMA).
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