US Dollar firmer, in daily highs around 93.40 ahead of CPI

The US Dollar Index (DXY0 – which tracks the greenback vs. a basket of its main rivals – seems to have recovered the smile today and is now moving higher to the 93.40 region, or session tops.

US Dollar focus on CPI

After two consecutive sessions with losses, the index has managed to regain some buying interest and is now pushing higher towards the area of 93.40 following the opening bell in Europe.

The buck shrugged off poor results from US producer prices in July (Thursday) as well as the dovish (at least not hawkish) message from NY Fed W.Dudley yesterday.

Dudley believes that inflation could start to pick up pace in the medium term, although at the same time he ruled out that the Fed could achieve its inflation goal this year. Dudley expects that a weaker Dollar plus a tight labour market should start putting upside pressure on inflation soon.

He also added, “We’re not going to get to a year-over-year number of 2% until some of these very low readings drop out of the statistics six to ten months from now”.

In the data space, key July’s inflation figures tracked by the CPI are due next, with analysts at Danske Bank arguing “Although the Fed continues to believe the tighter labour market will eventually drive inflation up and the US dollar has recently depreciated sharply, these are both effects that take a long time to work their way into the CPI numbers”.

In addition, Dallas Fed r.kaplan (voter, hawkish) and Minneapolis Fed N.Kashkari (voter, dovish) are also due to speak.

US Dollar relevant levels

The index is gaining 0.11% at 93.40 and a break above 93.77 (high Aug.8/9) would aim for 94.11 (high Jul.26) and finally 95.10 (23.6% Fibo of the 2017 drop). On the flip side, the next support lines up at 93.14 (10-day sma) seconded by 93.12 (low Aug.8) and finally 92.39 (2017 low Aug.2).

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