US Dollar Index pauses two-day winning streak as US House impeaches President Trump

With the US House giving enough ‘yes’ to impeach President Donald Trump, the US Dollar Index (DXY) drops to 97.32 ahead of the European session on Thursday.

The House of Representatives held votes on two subjects, namely the Abuses of Power and the Obstruction of Congress. Both of them passed with flying colors and made way for the Democrats’ dream to impeach President Donald Trump. Now, the drama will shift to the Senate during early-January where the ruling Republicans have the majority.

Just after the votes, White House spokeswoman Stephanie Grisham crossed wires, via Reuters, while saying that President Trump is confident the Senate will restore regular order, fairness, and due process.

Considering this, Speaker Nancy Pelosi took the decision of not transmitting the articles of impeachment to the Senate on an immediate basis.

Elsewhere, China said the impeachment won’t change its trade stance with the US while US President Trump was quoted reiterating to have a great deal with China. Also, White House Adviser Larry Kudlow earlier said that he will closely monitor China’s compliance with the phase-one for six to nine months while also confirming the US dislikes for China’s disrespect for human rights.

With this, market’s risk tone turned heavy and dragged the US 10-year treasury yields down to 1.90%.

Looking forward, a busy calendar has Philadelphia Fed Manufacturing Survey and Existing Home Sales, also the weekly jobless claims, to watch for. Additionally, headlines concerning trade/politics will keep market players busy. As per the US data, TD Securities’ report mentions, “The key data will be jobless claims and the Philadelphia Fed survey. On claims, last week's 252K reading was well above the recent sub-220K trend and, on the surface, another relatively high reading, as we are forecasting, could suggest that the labor market is starting to weaken significantly. However, our 240K forecast reflects our second-guessing of the seasonal adjustment process, which is especially challenging at this time of year. We caution against extrapolating unless the rise is sustained in the coming weeks. The Philadelphia Fed survey will mostly, but not entirely, reflect pre-China-trade-deal responses.”

Technical Analysis

200-day Exponential Moving Average (EMA) near 97.50 offers immediate upside barrier while the greenback gauge’s further downside can aim for July 18 low near 96.67.