US Dollar Index pushes higher and approaches 92.70 ahead of Payrolls

  • DXY trades in levels last seen in April near 92.70.
  • The risk-off mood continues to bolster the demand for the dollar.
  • June’s Nonfarm Payrolls, Unemployment Rate take centre stage later.

The US Dollar Index (DXY), which gauges the greenback vs. a bundle of its main competitors, remains well bid and reaches new tops in the 92.70 area on Friday.

US Dollar Index focused on NFP

The index extends the positive streak for yet another session at the end of the week and trades in new multi-month highs ahead of the release of the key Nonfarm Payrolls for the month of June.

Indeed, better-than-expected results from the ADP report and Initial Claims earlier in the week seem to have lifted even further the optimism ahead of the NFP, propping up the sentiment around the buck at the same time.

A positive outcome at the June’s Payrolls could add to the ongoing debate regarding the timing of the tapering talk by the Federal Reserve, which could be earlier than initially anticipated.

Later in the US data space, consensus sees the economy adding 700K jobs in June and the jobless rate ticking lower to 5.7% in the same period. In addition, Factory Orders are expected to have expanded at a monthly 1.6% during May.

What to look for around USD

The index manages to clinch new highs in the 92.70 region and remains poised to extend the uptrend in the short-term horizon. The recent investors’ shift in the sentiment around the dollar seems justified by the pick-up in risk aversion on the back of pandemic concerns, strong fundamentals, high inflation and tapering prospects. In addition, the likeliness that the Fed could modify the bond-purchase programme before anyone had anticipated and a potential rate hike in H2 2022 have been collaborating with the change of heart in the dollar as of late and particularly after the latest FOMC event.

Key events in the US this week: Nonfarm Payrolls, Unemployment Rate, Balance of Trade, Factory Orders (Friday).

Eminent issues on the back boiler: Biden’s plans to support infrastructure and families, worth nearly $6 trillion. US-China trade conflict under the Biden’s administration. Tapering speculation vs. economic recovery. US real interest rates vs. Europe. Could US fiscal stimulus lead to overheating?

US Dollar Index relevant levels

Now, the index is gaining 0.16% at 92.67 and a breakout of 92.69 (weekly high Jul.1) would open the door to 93.00 (round level) and finally 93.43 (2021 high Mar.21). On the downside, initial contention emerges at 91.51 (weekly low Jun.23) followed by 91.43 (200-day SMA) and finally 89.53 (monthly low May 25).

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