US Dollar edges lower below 93.30 on Fed's Beige Book
The US Dollar Index, which tracks the greenback against a basket of six trade-weighted peers, came under a modest selling pressure in the late NA session and refreshed its daily low at 93.22. As of writing, the index was at 93.25, losing 0.12% on the day.
On Wednesday, the Fed's latest Beige Book showed that the economic activity in the U.S. expanded at a modest to moderate pace in September through early October. Moreover, the report revealed that despite a tight labor market, the majority of districts saw only a modest to moderate wage pressures while price pressures remained modest.
Commenting on today's Beige Book, "Optically, we consider this a better Beige Book than the one released six weeks ago. The root word strong- appeared 70 times in today's document, up from 54 in the September 6 version and the most since the May 31 version (76). The root word strength- appeared 21 times, six more than on September 6 and the most of any of the last six Beige Books. "Moderate" came up 76 times, used with the same frequency as six weeks ago. "Modest" appeared less often, 112 times today versus 137 times on September 6. "Weak-" was used 14 times, down one from the last Beige Book but the fewest of any reports this year," Reuters noted.
Earlier in the session, dismal macroeconomic data from the U.S. forced the index to erase its gains and turn negative on the day. Meanwhile, FOMC member's speeches didn't receive any reaction from the investors as they refrained from commenting on the monetary policy outlook. Nonetheless, today's retreat looks more like a technical correction of the modest rise witnessed on the first two days of the week than anything else and as long as the index closes the day above the 93 mark, it's likely to make fresh attempts on the upside.
- US: Housing starts in Sept were at 1,127,000, 4.7% below August estimate of 1,183,000
- Fed's Kaplan: Markets signaling sluggish growth in the future
Technical outlook
The initial support for the index aligns at 93 (psychological level) ahead of 92.60 (Oct. 13 low) and 92 (psychological level/Sep. 25 low). On the upside, resistances could be encountered at 93.65 (daily high), 94.10 (Oct. 6 high) and 95 (psychological level).
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.
