US Dollar Index recovers above 90.00 on market optimism, US budget, PCE inflation in focus
|DXY reverses previous day’s pullback from one-week top.
Biden’s $6.0 trillion offer joins US policymakers’ rejection of tapering to magnify the risk-on mood.
Cautious sentiment ahead of the data battles firmer Treasury yields, stock futures.
US dollar index (DXY) wavers around an intraday high of 90.09, up 0.07% on a day, during early Friday. In doing so, the greenback gauge remains firm around the one-week high flashed on Thursday while also reversing the pullback from the recent peak surrounding 90.17.
Behind the moves could be the firmer US Treasury yields and chatters surrounding the $6.0 trillion budget offer. Also contributing to the US dollar gains are aftershocks of US Treasury Secretary Janet Yellen’s comments rejection reflation and tapering risks. Additionally, cautious mood ahead of the key Core Personal Consumption Expenditure (PCE) Price Index for April release also favors the DXY.
Read: US PCE inflation preview: Gold remains key asset to watch
US President Joe Biden’s $6.0 trillion offer arrives at the time when his earlier $1.7 trillion infrastructure spending plan struggles to gain the policymakers’ acceptance. On top of that, Republicans’ offer of a $1.0 trillion budget and worries of record deficit also favor the US dollar’s safe-haven demand. Elsewhere, the Ex-Fed Chair finally joined the chorus of Fed speakers that term inflation run-up as temporary. Though, the same needs back-up from today’s key inflation data, also the Fed’s preferred gauge for measuring price pressure.
Read: Timing of US budget release itself has significance – Goldman Sachs
Elsewhere, Japan is up for extending virus-led emergencies till June 20 and Australia’s Victoria is under seven-day lockdown due to the coronavirus (COVID-19) resurgence.
Amid these plays, S&P 500 Futures print 0.30% gains to mark a three-day uptrend whereas the US 10-year Treasury yield stays firm above 1.61%.
Moving on, DXY traders may have to keep their eyes on the Treasury yields and the market’s cautious mood ahead of the US PCE inflation data and budget release. Following that, the risk-on mood is likely to extend should the outcomes tames inflation risks and favor more money respectively.
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