- Downside momentum indicates that the DXY will re-visit its six-week low at 104.64.
- The odds of a Fed rate hike will remain steady while the hawkish guidance will trim abruptly.
- A meaningful decline in the US CPI has underpinned risk-sensitive assets.
The US dollar index (DXY) witnessed an intense sell-off on Wednesday after a downward shift in the US Consumer Price Index (CPI). The DXY fell like a house of cards as a significant slowdown in the price pressures trimmed the odds of a bumper rate hike by the Federal Reserve (Fed) in its September monetary policy meeting. A downside break of the consolidation formed in a 106.00-106.80 range dragged the asset towards 104.64. A pullback move has been observed. However, the downside will remain intact.
Plain-Vanilla CPI skids 60 bps
The plain-vanilla US inflation landed at 8.5%, lower than the expectations and the prior release of 8.7% and 9.1% on an annual basis. A decent drop in the inflation rate on an annual basis led by a serious fall in oil prices in July has displayed a meaningful exhaustion signal to the market participants. No doubt, more rate hikes will be announced by the Federal Reserve (Fed). However, the hawkish long-term guidance will witness a severe dent.
Risk-on market mood to remain for a while
After a series of policy tightening measures by the Fed through raising interest rates and concluding the bond-purchase program, a sigh of relief is taken by Fed policymakers. A month with upbeat employment data and a significant drop in the price pressures is what investors have been eyeing for the past few months to push liquidity into the risk-perceives assets. Going forward, the risk-on impulse will remain active for a tad longer.
Dollar Index Spot
|Today last price||105.24|
|Today Daily Change||0.01|
|Today Daily Change %||0.01|
|Today daily open||105.23|
|Previous Daily High||106.36|
|Previous Daily Low||104.64|
|Previous Weekly High||107.43|
|Previous Weekly Low||105.54|
|Previous Monthly High||109.29|
|Previous Monthly Low||104.69|
|Daily Fibonacci 38.2%||105.3|
|Daily Fibonacci 61.8%||105.7|
|Daily Pivot Point S1||104.46|
|Daily Pivot Point S2||103.68|
|Daily Pivot Point S3||102.73|
|Daily Pivot Point R1||106.19|
|Daily Pivot Point R2||107.14|
|Daily Pivot Point R3||107.91|
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