- DXY stays bid beyond the 98.00 mark.
- Yields of the US 10-year note remain depressed near 1.45%.
- MBA’s Mortgage Applications contracted 5.6% WoW.
The Greenback keeps the upbeat tone intact so far today and is propping up the up move in the US Dollar Index (DXY) above the key 98.00 barrier.
US Dollar Index focused on trade, yields
The index has so far managed well to reverse Tuesday’s pullback and refocus its attention to the 98.00 handle and beyond.
The buck remains firm despite yields of the US 10-year reference keep marching south to fresh lows in the 1.45% area amidst increasing scepticism over the resumption of the US-China trade talks.
Nothing relevant on the docket today, with only weekly figures for Mortgage Applications dropping 6.2%. Later in the session, the EIA will publish its weekly variation of US crude oil inventories. In addition, Richmond Fed T.Barkin (2021 voter, centrist) speaks at the West Virginia Chamber of Commerce and San Francisco Fed M.Daly (2021 voter, centrist) will speak at the RBNZ/IMF Conference in New Zealand.
What to look for around USD
The inversion of the yield curve in combination with trade jitters keep driving the mood in the Greenback amidst concerns of an upcoming recession in the US economy at some point in the next couple of years. In the meantime, the solid labour market plus strong consumer confidence appears to contradict this view for the time being, while inflation is seeing regaining upside traction in the near term. Powell recently reiterated that the Fed ‘will act as appropriate to sustain the expansion’, leaving the door open for probable rate cuts at the September/October meetings at his speech at the Jackson Hole Symposium, although he did not unveil any reaction function regarding the interest rate path for the upcoming months.
US Dollar Index relevant levels
At the moment, the pair is gaining 0.13% at 98.14 and faces the next hurdle at 98.22 (high Aug.28) seconded by 98.45 (high Aug.23) and then 98.93 (2019 high Aug.1). On the other hand, a breach of 97.17 (low Aug.23) would aim for 97.01 (200-day SMA) and finally 96.67 (low Jul.18).
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