US Dollar Index flirting with tops near 98.00

  • DXY extends the bull run to the 98.00 area.
  • Yields of the US 10-year note rose to 1.86%.
  • Non-farm Productivity, Unit Labor Costs next on the docket.

The US Dollar Index (DXY), which gauges the greenback vs. a basket of its main rivals, is looking to extend the positive performance to the 98.00 region and above.

US Dollar Index firmer on data, looks to trade

The index keeps the bid tone unchanged so far this week, advancing to last week’s tops in the 98.00 neighbourhood, where it seems to have emerged a tough barrier for the time being.

Investors welcomed the improvement in the ISM Non-Manufacturing in October, which gave extra wings to the buck and lifted US yields.

In addition, the sentiment around the greenback has been also favoured by the positive news from the US-China trade front, where market participants continue to assess the possibility that the US could remove tariffs from some Chinese imports.

Later in the session, Non-farm Productivity and Unit Labor Costs are due along with the usual weekly report on US crude oil supplies by the EIA. Additionally,

Chicago Fed C.Evans (voter, centrist) speaks in New York, Philly Fed P.Harker will discuss ‘Innovation and the Future of Work’ and NY Fed J.Williams (permanent voter, centrist) will participate in a Q&A session.

What to look for around USD

DXY keeps the better mood in the first half of the week so far, tracking recent improvement in the US-China trade front and following positive results from domestic fundamentals. 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 0.01% at 97.92 and a break above 98.00 (high Oct.30) would open the door to 98.28 (55-day SMA) and finally 99.25 (high Oct.8). On the downside, immediate contention aligns at 97.47 (200-day SMA) seconded by 97.11 (monthly low Nov.1) and then 97.03 (monthly low Aug.9).

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