US Dollar Index leaps to daily highs near 97.50 on NFP

The Greenback has recovered the smile somewhat on Friday and is now testing daily highs in the 97.45/50 band when measured by the US Dollar Index (DXY).

US Dollar Index upbeat on Payrolls

The index has finally seen some light at the end of the tunnel and is now trading on the positive side of the road after four consecutive daily pullbacks.

Indeed, the buck gathered upside traction after the US economy created 128K jobs during October, surprising markets to the upside.

Additional data saw the jobless rate edging a tad higher to 3.6% from 3.5% and wage inflation pressures gauged by the Average Hourly Earnings expanding at a monthly 0.2% and keeping the solid pace at 3.0% on an annualized basis.

Later in the session, the always-critical ISM manufacturing is due seconded by Construction Spending and speeches by FOMC’S permanent voters R.Clarida (dovish), R.Quarles (centrist) and NY Fed J.Williams (centrist).

What to look for around USD

DXY came under extra downside pressure despite the Fed matched initial expectations by lowering rates at Wednesday’s meeting and signalling a pause in the easing cycle in the near term at least. 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 the 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 0.10% at 97.43 and a break above 98.00 (high Oct.30) would open the door to 98.31 (55-day SMA) and finally 99.25 (high Oct.9). On the downside, immediate contention aligns at 97.14 (monthly low Oct.18) seconded by 97.03 (monthly low Aug.9) and then 96.67 (low Jul.18).