US Dollar Index under pressure near 97.30, focus remains on trade
|- The index dropped and bounced off the 97.00 area on Monday.
- Yields of the US 10-year note tested sub-2.40% levels.
- Fedspeak, Export/Import Prices, NFIB index next on the docket.
The greenback, in terms of the US Dollar Index (DXY), is trading without direction around the 97.30 region ahead of the opening bell in Euroland.
US Dollar Index looks to trade, data
After briefly testing the 97.00 neighbourhood at the beginning of the week, the index managed to regain some ground and regain the current 97.30 area, where it is now attempting to consolidate.
The greenback remains vigilant on the US-China trade talks (or lack of them), particularly after China announced on Monday it will impose tariffs on more than 5,000 US products worth $60 billion, starting on June 1. Despite the recent announcements by both countries, US Treasury Secretary S.Mnuchin stressed the negotiations are still underway.
Fedspeak yesterday noted Vice Chair R.Clarida saying the economy is closer to its inflation and full employment targets, while Boston Fed E.Rosengren said it is still premature to assess the impact of a longer-than-expected US-China trade war on the economy and monetary policy.
Later in the NA session, April Import/Export Prices are due along with the NFIB index and the API report. In addition, New York Fed J.Williams (permanent voter, centrist) will speak at a SNB/IMF event in Zurich, KC Fed E.George (voter, hawkish) will speak to the Economic Club of Minnesota and San Francisco Fed M.Daly (2021 voter, centrist) will speak at the Northwestern University.
What to look for around USD
The centre of the debate for the greenback has shifted to the US-China trade dispute, although a high degree of uncertainty as well as caution among investors seem to prevail for the time being. On another direction, the lack of traction in US inflation – and concerns among Fed members – is currently weighing on the buck and threatens its constructive view. Dips in the greenback, however, are seen shallow as overseas weakness, the safe haven appeal, favourable yield spreads vs. the Fed’s G10 peers and the status of global reserve currency keep the positive outlook on the index unchanged.
US Dollar Index relevant levels
At the moment, the pair is retreating 0.03% at 97.32 and a breach 97.03 (low May 13) would expose 96.72 (100-day SMA) and finally 96.30 (200-day SMA). On the other hand, the next up barrier emerges at 97.54 (21-day SMA) seconded by 98.10 (high May 3) and finally 98.32 (2019 high Apr.25).
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