US Dollar Index clings to gains near 97.60 ahead of data

  • DXY extends the upbeat mood to 4-day highs.
  • US 10-year yields climbed to 1.80%.
  • ISM Non-Manufacturing, Trade Balance, Fedspeak on the docket.

The Greenback, when tracked by the US Dollar Index (DXY), is looking to extend the positive start of the week and advances to the 97.60/65 band, or 4-day highs.

US Dollar Index focused on trade, data

The index moved higher at the beginning of the week on the back of a generalized risk-on mood following auspicious headlines from the US-China trade front. In fact, news was citing the possibility that the US could roll back tariffs on Chinese products, all under the recently announced ‘Phase One’ deal.

Positive developments in the trade front lifted US yields, pushed stocks to record highs and favoured the exodus from the safe havens, at the same time morphing into fresh oxygen for the buck.

In the US data space, the ISM Non-Manufacturing will be in centre stage later today seconded by Trade Balance figures, Markit’s final October Services PMI and JOLT Job Openings. In addition, Richmond Fed T.Barkin (2021 voter, centrist) will speak in Baltimore and Dallas Fed R.Kaplan (2020 voter, dovish) speaks in Dallas.

What to look for around USD

DXY keeps the better mood in the first half of the week so far, all in response to the recent improvement in the US-China trade front and as market participants appear to have digested last week’s ‘hawkish cut’ by the Fed. The Fed is now expected to remain vigilant mainly on the global scenario, where trade concerns and the impact on global growth remain in centre stage amidst some loss of momentum in the domestic economy. On the broader view, the constructive outlook in DXY looks a bit damaged but it still is in play as the Fed moves into an impasse vs. the dovish stance from its G10 peers, the Dollar’s safe haven appeal and the status of ‘global reserve currency’.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.02% at 97.58 and a break above 97.65 (high Nov.5) would aim for 98.00 (high Oct.30) and finally 98.28 (55-day SMA). On the downside, immediate contention aligns at 97.11 (monthly low Nov.1) seconded by 97.03 (monthly low Aug.9) and then 96.67 (low Jul.18).

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