USD Index looks consolidative above 106.00 ahead of data, Fedspeak

The index alternates gains with losses in the low-106.00s.
US yields trade within narrow ranges near recent peaks.
Housing data, Fed Beige Book, Fedspeak take centre stage midweek.

Pablo Piovano FXStreet

The USD Index (DXY), which gauges the greenback vs. a bundle of its main competitors, navigates a tight range in the 106.10-106.20 band ahead of the opening bell in the old continent on Wednesday.

USD Index focuses on data, Fed speakers

The index extends the range bound theme in the lower end of the weekly range amidst unclear direction in the global markets.

Indeed, while better-than-expected Chinese data underpins the appetite for the risk complex, the deterioration of the geopolitical scenario in the Middle East seems to favour the resurgence of the risk aversion.

In the meantime, the index appears supported by the 106.00 zone against the backdrop of rising speculation of a tighter-for-longer stance from the Federal Reserve, a view that was further propped up following Tuesday’s stronger-than-expected readings from US Retail Sales and Industrial Production.

Later in the session, Housing Starts and Building Permits are due along with usual MBA Mortgage Applications, the Fed’s Beige Book and TIC Flows.

In addition, investors will closely follow speeches from FOMC C. Waller (permanent voter, centrist), NY Fed J, Williams (permanent voter, centrist), FOMC M. Bowman (permanent voter, hawk) and Philly Fed P. Harker (voter, hawk).

What to look for around USD

The index so far trades without a clear direction just above the 106.00 hurdle ahead of key Fedspeak on Wednesday.

In the meantime, support for the dollar keeps coming from the good health of the US economy, which at the same time appears underpinned by the renewed tighter-for-longer stance narrative from the Federal Reserve.

Key events in the US this week: MBA Mortgage Applications, Building Permits, Housing Starts, Fed Beige Book, TIC Flows (Wednesday) - Initial Jobless Claims, Philly Fed Manufacturing Index, CB Leading Index, Existing Home Sales, Fed Powell (Thursday).

Eminent issues on the back boiler: Persevering debate over a soft or hard landing for the US economy. Incipient speculation of rate cuts in early 2024. Geopolitical effervescence vs. Russia and China and the Middle East.

USD Index relevant levels

Now, the index is down 0.05% at 106.14 and faces the next support at 105.53 (monthly low October 12) ahead of 104.42 (weekly low September 11) and then 103.23 (200-day SMA). On the other hand, a breakout of 106.78 (weekly peak October 13) could expose 107.34 (2023 high October 3) and finally 107.99 (weekly high November 21 2022).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

AUD/USD consolidates above 0.7000; remains close to monthly top

AUD/USD holds steady above 0.7000 during the Asian session on Friday, trading just below the previous day's monthly low amid diverging forces. A hawkish RBA continues to support the Aussie, while the recent decline in US bond yields keeps the US Dollar depressed near a three-week low. However, oil-driven inflation fears reinforce Fed hike bets, which, along with geopolitical risks, could benefit the safe-haven buck and cap the currency pair.

USD/JPY bounces off one-month low; climbs to 157.00 amid reviving USD demand

USD/JPY rebounds from the 156.00 neighborhood, or a one-month low touched during Friday’s Asian session, with bulls looking to extend momentum beyond 157.00 amid the emergence of some US Dollar buying. Meanwhile, Japan's National CPI rose to a nine-month peak and reaffirmed BoJ rate-hike bets, which could support the Japanese Yen and cap gains for the currency pair.

Gold treads water around $4,000

Gold prices maintain its offered stance in place at the end of the week, hovering around the key $4,000 threshold per troy ounce. The persistent selling bias in the precious metal comes amid decent gains in the US Dollar and an acceptable rebound in US Treasury yields across the curve, all alongside further upside traction in crude oil prices.

Crypto Today: Bitcoin holds the 50-day EMA as Ethereum and XRP face structural resistance

Bitcoin gradually ticks up on Friday, trading above $81,000. The Crypto King has recently defended structural support near $80,000, reinforcing the prevailing bullish outlook. Ethereum similarly edges higher above $2,400, while Ripple trades above $1.32 after testing support around $1.30.

The French bond panic is overdone. Here's what the market is misreading

France's 10-year government bond yield has climbed above 5%, reigniting fears of a sovereign debt crisis in the Eurozone. With public debt exceeding €3.5 trillion, persistent budget deficits and a fragmented political landscape, investors are increasingly questioning the French government's ability to stabilize its finances.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.