- US Dollar Index picks up bids to consolidate the biggest daily loss in eight day.
- Firmer yields, hawkish Fed bets and Asian diplomats’ rejection to tighten policies underpin the US dollar’s demand.
- Upbeat prints of US Retail Sales, preliminary CSI and 5-year inflation expectations needed to defend the DXY bulls.
US Dollar Index (DXY) reverses the previous day’s pullback from a two-week high despite staying sluggish around 112.50 during Friday’s Asian session.
That said, the greenback’s gauge versus the six major currencies dropped the most in eight days on Thursday even as the US Consumer Price Index (CPI) figures came in firmer and the Fed bets also priced in 75 bps move, not to forget firmer US Treasury yields.
The DXY’s latest inaction could be linked to the mixed mood in Asia as the Japanese and Chinese policymakers ignore the International Monetary Fund’s (IMF) push for higher rates. On the same line could be the People’s Bank of China (PBOC) Governor Yi Gang’s readiness for strong stimulus.
Alternatively, US 10-year Treasury yields remain firmer around 3.96% after snapping a two-day downtrend to poke the October 2008 levels. The firmer bond coupons portray the market’s recession fears and rush towards the risk-safety but failed to propel the US dollar on Thursday. Additionally favoring the DXY could be the political pessimism in the UK amid uncertainty over the mini-budget.
A third consecutively softer US Consumer Price Index (CPI) jostled with the 40-year high Core CPI and drowned the US Dollar Index despite hawkish Fed bets. Talking about the data, the US CPI rose to 8.2% versus 8.1% market forecasts but eased as compared to the 8.3% prior. The CPI ex Food & Energy, mostly known as the Core CPI, jumped to 6.6% while crossing the 6.5% expectations and 6.3% previous readings.
While portraying the mood, Wall Street closed with notable gains but S&P 500 Futures remain directionless and hence challenge the DXY traders ahead of the key US Retail Sales for September, expected 0.2% MoM versus 0.3% prior. Also important will be the preliminary readings of the Michigan Consumer Sentiment Index (CSI) and the University of Michigan’s (UoM) 5-year Consumer Inflation Expectations for October.
Also read: US Retail Sales Preview: Positive surprises eyed for dollar bulls to regain poise
Technical analysis
Multiple failures to provide a daily closing beyond 113.30 keeps the US Dollar Index bears hopeful even if the 21-DMA level of 112.20 restricts immediate downside.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD remains stuck near 1.0800 after US employment data
EUR/USD struggles to find direction and moves up and down in a narrow channel at around 1.0800 in the American session on Wednesday. The data from the US showed that employment in the private sector rose less than expected in November and helped the pair limit its losses.
GBP/USD battles 1.2600 after US ADP data
GBP/USD is having a difficult time stabilizing above 1.2600 after closing the first two trading days of the week in negative territory. Despite the weaker-than-expected ADP Employment Change data, the US Dollar stays relatively resilient amid cautious market stance.
Gold rebounds to $2,030 as US yields stretch lower
Gold recovered toward $2,030 after testing $2,020 earlier in the day. The benchmark 10-year US Treasury bond yield declined to its lowest level in three months below 4.15% after US employment data and helped XAU/USD gain traction.
Bitcoin-based meme coin ORDI price action wobbles after 1,100% rally
The Bitcoin-based BRC-20 meme coin, which had people confused as being an actual valuable token, is now slowly creeping up to that status. ORDI price rise over the past couple of days has been astonishing, and with BTC driving the price and crossing $44,000, ORDI is also gaining rapidly. But not for long.
The Dollar is struggling to trend
For the last three trading sessions, the dollar index has been crossing up and down the 200-day moving average every day. All in all, the flirting with this level has been going on for more than three weeks, during which neither bulls nor bears were able to form a stable trend.