US Dollar Index sticks around 99.00 post-CPI


  • DXY gyrates around the 99.00 mark on Thursday.
  • Risk aversion continues to dominate the sentiment.
  • US headline CPI rose 2.3% YoY during last month.

The US Dollar Index (DXY), which gauges the buck vs. a bundle of its main competitors, remains quite firm so far this week and navigates the upper end of the yearly range around 99.00.

US Dollar Index bid post-US CPI

The upbeat tone around the index stays unaltered so far on Thursday and after inflation figures tracked by the headline CPI showed consumer prices rose 0.1% inter-month in December and 2.5% over the last twelve months. In addition, core prices (inflation excluding food and energy costs) gained 0.2% MoM and 2.35 from a year earlier.

Still in the US docket, usual weekly Claims rose by 205k, taking the 4-Week Average to 212.00K (unchanged from the previous week).

In the meantime, fresh concerns around the COVID-19 have motivated market participants to dump riskier assets and seek refuge in the safe haven universe, favouring, among others, the buck the yen and gold.

Later in the NA session, New York Fed J.Williams (permanent voter, centrist) will speak in New York, closing Thursday’s calendar.

What to look for around USD

The index extended the rally to the area above the 99.00 mark, clinching at the same time new 2020 tops. Following a neutral/dovish message from the FOMC at its latest meeting, the upbeat assessment of the economy and a resilient financial system confirmed by the Fed’s semi-annual Monetary Policy Report published last week and “no news” from Powell’s testimonies this week, investors should now keep looking to the performance of US fundamentals and the broader risk appetite trends for direction as well as any fresh developments from the COVID-19. In the meantime, the outlook on the buck remains constructive and propped up by the current ‘wait-and-see’ stance from the Fed vs. the broad-based dovish view from its G10 peers, the ‘good shape’ of the domestic economy, the dollar’s safe haven appeal and its status of ‘global reserve currency’.

 

US Dollar Index relevant levels

At the moment, the index is gaining 0.04% at 99.05 and a breakout of 99.06 (2020 high Feb.12) would aim for 99.37 (high Sep.3 2019) and finally 99.67 (2019 high Oct.1). On the other hand, initial contention emerges at 98.54 (monthly high Nov.29 2019) seconded by 98.06 (21-day SMA) and then 97.75 (200-day SMA).

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