- The demand for the Dollar stays subdued on Wednesday.
- US 10-year yields navigate the 1.73% region so far.
- US Retail Sales disappointed markets in September.
The selling bias remains unchanged around the Greenback on Wednesday and keeps the US Dollar Index (DXY) depressed in the lower end of the range near 98.20.
US Dollar Index offered post-data
The index is now adding to Tuesday’s losses in the 98.20 region – or 4-week lows - and remains under extra pressure after Retail Sales surprised markets to the downside in September.
Also weighing on the buck, positive headlines from the Brexit process keeps sustaining the mood in the risk-associated complex, while there is no news on the US-China trade front.
In added, headline sales contracted at a monthly 0.3% during last month, while August’s sales were revised higher to +0.6%. Core sales also came on the weak side, contracting 0.1% vs. a forecasted 0.2% expansion.
Later in the session, the NAHB index is due seconded by Business Inventories, TIC Flows and the Fed’s Beige Book.
What to look for around USD
DXY remains entrenched in the lower bound of the range near 98.20 amidst rising scepticism on the US-China trade front and increased volatility in the riskier assets. In the meantime, investors’ attention have now shifted to the increasing likeliness of another insurance cut by the Fed at the October meeting. Despite evidence that the US economy could be losing some momentum, the labour market remains strong as well as consumer spending, although the latest mixed results from the CPI appear to support the view of extra cuts by the Fed in the near future. On the broader view, the constructive outlook in DXY looks a bit damaged but it still is in play amidst a divided FOMC vs. a broad-based dovish stance from the rest of the G-10 central banks. In addition, the positive view on USD remains well sustained by its safe haven appeal and the status of ‘global reserve currency’.
US Dollar Index relevant levels
At the moment, the pair is losing 0.07% at 98.24 and faces immediate contention at 98.16 (monthly low Oct.16) seconded by 97.86 (monthly low Sep.13) and then 97.80 (100-day SMA). On the upside, a break above 98.78 (21-day SMA) would open the door to 99.25 (high Oct.9) and then 99.67 (2019 high Oct.1).
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