US Dollar Index advances to new 2021 highs beyond 91.30

DXY fades Wednesday’s downtick and returns to 91.30.
Positive growth outlook, vaccine rollout lend support to the dollar.
Initial Claims, Factory Orders next of relevance in the US calendar.

Pablo Piovano FXStreet

The greenback resumes the upside and lifts the US Dollar Index (DXY) to the area of recent yearly tops around 91.30.

US Dollar Index remains bid and looks to data, yields

The softer tone in the risk complex coupled with higher US yields give further legs to the dollar and propel the index to new YTD peaks in the 91.30/40 band in the second half of the week.

Recent better-than-expected results from US fundamentals plus the vaccine rollout continue to favour better growth prospects vs. overseas economies and sustain the move higher in US yields, all morphing into extra support for the buck.

In the US calendar, the usual weekly Claims are due later in the NA session seconded by Factory Orders for the month of December and the speech by San Francisco Fed M.Daly (voter, centrist).

What to look for around USD

The dollar’s upside remains well and sound and pushed DXY to new YTD highs in the 91.30/40 band on Thursday, always on the back of the renewed offered bias in the risk-associated universe and higher yields in the US bond market. The continuation of the uptrend in the dollar, however, is forecast to remain somewhat contained amidst the fragile outlook for the currency in the medium/longer-term, and always against the backdrop of the current massive monetary/fiscal stimulus in the US economy, the “lower for longer” stance from the Fed and prospects of a strong recovery in the global economy.

US Dollar Index relevant levels

At the moment, the index is gaining 0.15% at 91.34 and a breakout of 91.32 (2021 high Feb.4) would open the door to 91.86 (100-day SMA) and finally 92.46 (23.6% Fibo of the 2020-2021 drop). On the flip side, initial support is located at 90.51 (21-day SMA) followed by 89.20 (2021 low Jan.6) and finally 88.94 (monthly low March 2018).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

USD/JPY eyes August swing low, near 155.20 ahead of US NFP

USD/JPY retests the August monthly swing low during the Asian session on Friday as a more hawkish repricing of BoJ rate-hike bets and a suspected intervention continue to underpin the Japanese Yen. Meanwhile, the US Dollar is seen consolidating the previous day's heavy losses amid soft US bond yields, further weighing on the currency pair as traders keenly await the US NFP report.

AUD/USD consolidates above 0.7200; US NFP awaited

AUD/USD holds steady above 0.7200, near its highest level since mid-May, as bulls await the US NFP report for more cues on the Fed's policy path before placing fresh bets. Meanwhile, the recent decline in US bond yields keeps the US Dollar depressed near its lowest level in over a week and acts as a tailwind for the Aussie amid the RBA's hawkish tilt.

Gold tumbles as blockbuster US NFP lift US Dollar, Treasury yields

Gold (XAU/USD) falls sharply on Friday, snapping a two-day recovery after the US Nonfarm Payrolls (NFP) report surprised strongly to the upside. The metal briefly climbed above $4,500 on Thursday, gaining nearly 2%, but has since erased a large part of that advance.

Crypto’s $638 million buyback boom may not be as bullish as it looks

Decentralized Finance (DeFi) protocols reportedly spent $638 million to buy back their native tokens in August, up 17% from a year earlier. On the surface, the buyback trend suggests the cryptocurrency industry is maturing fast, adopting one of Wall Street’s oldest tools to bolster valuations and distribute revenue. The headline becomes less impressive once the number is opened up.

Why hawkish Bank of Japan expectations aren't enough to sustain the Japanese Yen rally

The Japanese Yen (JPY) experienced a sudden burst higher after falling back below the 160.00 psychological mark against the US Dollar (USD) earlier this week amid a more hawkish repricing of Bank of Japan (BoJ) rate hike expectations.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.