US Dollar consolidates gains, remains positive on day, still below 93
Following a relatively volatile opening to the NA session, the US Dollar Index, which tracks the greenback against a basket of six trade-weighted peers, calmed down and started to consolidate its daily gains. As of writing, the index was at 92.85, up 0.18% on the day.
The initial reaction to the first batch of macro data from the U.S. dragged the index to a session low of 92.64 as the potential positive impact of a higher than expected core PCE price index was neutralized by a weaker-than-expected income growth. However, the selling pressure on the greenback faded away quickly as the next set of data pointed to a robust expansion in the manufacturing sector in the U.S. Nevertheless, the mixed data failed to carry the index above the 93 mark.
Tomorrow's economic docket from the U.S. will feature the ADP private sector employment growth data, which is expected to advance to 185K in July from 158K in June. A robust reading could provide an additional boost to the greenback as it would point to a strong NFP release on Friday. However, today's Manufacturing PMI report released by the Institute for Supply Management showed that the Employment Index fell by 2 points to 55.2 in July from 57.2 in June, suggesting that the manufacturing sector didn't employ as many workers as they did in June, which could impact the ADP and NFP data negatively.
Technical outlook
On the downside, 92.50 (May 2, 2016, low) could be seen as tough support ahead of 91.90 (May 3, 2016, low) and 91 (psychological level) for the index. On the flip side, a daily close above 93 (daily high) could allow for further recovery towards 93.80 (Jul. 28 high) and 94.20 (Jul. 17 high).
Today's data from the U.S.
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
