US dollar index posts highest weekly close since January after Trump’s victory
|The US dollar and the pound were the best performers on the week that was marked by the unexpected victory of Donald Trump. The initial results triggered a sell-off in equities worldwide but then Wall Street reversed its trend rising to record highs.
The US dollar index moved sharply during the week, with extreme volatility, last seen during the Brexit referendum. The index bottomed after the initial election results at 95.85 but then rose sharply, back to test the key resistance area of 99.00.
Today it peaked at 99.08, hitting the highest level since January. Near the end of the week, it was hovering around 99.00, still unable to confirm levels on top but consolidating an important weekly gain. Rising US bond yields gave support to the USD. The Greenback also rose against many emerging market currencies, particularly the Mexican peso and the Brazilian real.
Next week
The DXY rose during the week 2.15% and from the lows of Wednesday 3.30%. Momentum favors the upside and so far, overbought conditions have not stopped the rally. Next week will be relevant to see if it breaks decisively above 99.00, that would open the doors for a test of 100.00.
Market attention is likely to remain on Trump. Investors will continue to evaluate what his administration could do. Economic releases for next week include retail sales (Tuesday), PPI, industrial production (Wednesday) and CPI (Thursday).
To learn more about this topic, check our video analysis:
DXY from Tip TV Productions on Vimeo.
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