- DXY remains within familiar range in the mid-97.00s.
- US-China trade concerns remain well in place.
- US Producer Prices rose 0.2% MoM in July.
The US Dollar Index (DXY), which tracks the Greenback vs. its main rivals, keeps the flat trading unchanged in the 97.50/60 band.
US Dollar Index closes the week in red figures
The lack of fresh headlines from the US-China trade war prompted the continuation of the consolidative mood in US yields, where the 10-year benchmark is sidelined around the 1.70% area, rebounding from recent 3-year lows.
Also adding some weakness to the buck’s weekly outlook, speculations of further easing by the Federal Reserve appears to have gathered some steam in past hours, limiting occasional bouts of buying interest in DXY.
In the meantime, the index is closing the week in the red territory after three consecutive weekly advances, including fresh 2019 highs in levels just shy of 99.00 the figure (August 1).
In the US data space, Producer Prices rose at a monthly 0.2% during last month and 1.7% from a year earlier. Core prices contracted 0.1% inter-month and gained 2.1% on an annualized basis.
What to look for around USD
The fresh bout of US tariffs on Chinese products has undermined the Fed-led rally in the buck to levels last seen in May 2017 near 99.00 the figure, sparking a sharp leg lower to the area just above the critical 200-day SMA. By the same token, yields of the US 10-year benchmark have dropped to multi-year lows in the sub-1.60% area fuelled by the generalized ‘flight to safety” mood, always on the back of increasing jitters on the US-China trade war. Regarding the greenback, its demand appears propped up by its safe have appeal, the status of ‘global reserve currency’, solid US fundamentals and the less dovish stance from the Federal Reserve.
US Dollar Index relevant levels
At the moment, the pair is losing 0.02% at 97.55 and a breakdown of 97.21 (low Aug.6) would open the door to 96.93 (200-day SMA) and then 96.67 (low Jul.18). On the other hand, the next up barrier emerges at 97.85 (high Aug.7) seconded by 98.37 (monthly high May 23) and then 98.93 (2019 high Aug.1).
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