- The index looks for direction near 96.90 on Thursday.
- Yields of the US 10-year note bounce of 2.10%.
- Import/Export Prices, Initial Claims next on the docket.
The greenback, in terms of the US Dollar Index (DXY), is trading in a consolidative fashion around the 97.00 handle in the second half of the week.
US Dollar looks to trade, data
The index is now struggling for direction following Wednesday’s bullish ‘outside day’ and after surpassing, albeit briefly, the critical barrier at 97.00 the figure.
Trade tensions appear somewhat mitigated after President Trump expressed some optimism over clinching a deal with China. In this regard, the focus of attention remains on the upcoming G20 meeting in Osaka on June 28-29 and potential meeting with his Chinese peer Xi Jingpin.
The greenback has managed to leave behind the (anticipated) lack of traction in inflation figures during May after headline CPI showed prices rose 0.1% on a
monthly basis.
Later today, Import/Export Prices for the month of May are due along with the usual weekly report on the labour market.
What to look for around USD
Markets’ idea of a probable rate cut by the Federal Reserve in the near to medium term (insurance cut?) have been underpinned by poor data from the labour market and producer/consumer prices. However, and in spite of the recent results, the labour market remains strong, wage growth keep pushing higher and the overall economy looks healthy - specially when we consider the weakness in overseas economies – all begging the question whether current speculations of rate cuts are not overdone. In addition, US-China trade jitters remain everything but abated so far, shifting the focus of attention to the upcoming G20 meeting in Japan, where the issue should take centre stage.
US Dollar Index relevant levels
At the moment, the pair is retreating 0.04% at 96.92 and a break below 96.46 (low Jun.7) would open the door for 96.04 (50% Fibo of the 2017-2018 drop) and then 95.82 (low Feb.28). On the other hand, the next resistance emerges at 97.02 (high Jun.12) seconded by 97.42 (55-day SMA) and finally 97.87 (61.8% Fibo of the 2017-2018 drop).
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