- DXY looks to reverse Monday’s pullback, trades near 98.20.
- Investors’ attention remains on US-China trade.
- Focus today will be on Trump’s speech, NFIB index, Fedspeak.
The US Dollar Index (DXY), which gauges the greenback vs. a basket of its main competitors, is looking to extend the recovery following Monday’s moderate pullback.
US Dollar Index focused on trade, Trump
The index shed some ground at the beginning of the week, sparking a correction lower after meeting strong resistance in recent 3-week tops around 98.40 on Friday.
Jitters on the US-China trade front have re-emerged among investors in response to President Trump comments in past days, when stressed that he still made no decision regarding the roll over of part of the existing tariffs. These comments motivated investors to return to the safe havens and supported the fresh demand for gold and the Japanese yen among others.
Today, all the attention will be on the speech by President Trump at the Economic Club in New York, where he could unveil some fresh details regarding the progress of the ‘Phase One’ deal.
In the data space, the NFIB index will be the sole release later today. In addition, FOMC’s R.Clarida (permanent voter, dovish) will discuss ‘Monetary Policy, Price Stability and Bond Yields’ in Switzerland and Philly Fed P.Harker (2020 voter, dovish) will participate in a Q&A session on ‘What’s next for the US economy and the Fed?’ in New York.
What to look for around USD
DXY came under selling pressure after hitting multi-week highs in the 98.40 region on Friday. In the meantime, headlines from the US-China trade war should remain ruling the global sentiment, while the attention has now shifted to Trump’s speech later today and any remarks on the ‘Phase One’ deal. Later in the week, key data and Powell’s testimony should also help with the direction of the buck. On the broader view, the outlook on the greenback appears constructive on the back of the Fed’s renewed ‘wait-and-see’ mode vs. the dovish stance from its G10 peers, the dollar’s safe haven appeal and the status of ‘global reserve currency’.
US Dollar Index relevant levels
At the moment, the pair is gaining 0.01% at 98.22 and a break above 98.40 (monthly high Nov.8) would open the door to 99.25 (high Oct.8) and then 99.67 (2019 high Oct.1). On the flip side, immediate contention emerges at 97.93 (100-day SMA) seconded by 97.52 (200-day SMA) and finally 97.11 (monthly low Nov.1).
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