US Dollar Index meets support around 92.60, looks to data
- DXY navigates in the lower end of the recent range below 93.00.
- Dollar remains under pressure post-Powell’s speech on Friday.
- Pending Home Sales, Dallas Fed index next on tap in the docket.
The greenback, when gauged by the US Dollar Index (DXY), trades within a tight range near recent lows in the 92.60 zone.
US Dollar Index looks to data
The index starts the week on a consolidative mood near 92.60, as market participants continue to assess Friday’s speech by Fed’s Powell at the Jackson Hole Symposium.
Chief Powell remained cautious regarding the time when the Federal Reserve plans to start trimming its bond-purchase programme. He did suggest that QE tapering could start this year, adding that the US economy appears closer to the “substantial further progress”, although more needs to be done regarding the labour market.
Powell also made it clear that starting (and ending the QE programme) will be totally decoupled with the beginning of the tightening cycle via interest rate hikes, which markets’ consensus still places at some point by end of 2022.
In the US data space, Pending Home Sales are due seconded by the manufacturing gauge released by the Dallas Fed.
What to look for around USD
Powell’s cautious tone at his speech at the Jackson Hole Symposium caught USD-bulls off guard, sponsoring quite a noticeable corrective move in DXY to multi-day lows as a consequence. In the meantime, support for the buck is expected to come in the for of coronavirus concerns, high inflation and higher real yields, while upcoming key data releases are predicted to have a crucial role in the timing of the start of the QE tapering.
Key events in the US this week: Pending Home Sales (Monday) – House Price Index, CB Consumer Confidence (Tuesday) – ADP report, ISM Manufacturing (Wednesday) – Balance of Trade, Initial Claims, Factory Orders (Thursday) – Nonfarm Payrolls, ISM Non-Manufacturing (Friday).
Eminent issues on the back boiler: Biden’s multi-billion plan to support infrastructure and families. US-China trade conflict under the Biden’s administration. Tapering speculation vs. economic recovery. US real interest rates vs. Europe. Debt ceiling debate. Geopolitical risks stemming from Afghanistan.
US Dollar Index relevant levels
Now, the index is losing 0.01% at 92.67 and faces the next down barrier at 92.59 (low Aug.30) followed by 92.47 (low Aug.13) and finally 91.78 (monthly low Jul.30). On the flip side, a break above 93.72 (2021 high Aug.20) would open the door to 94.00 (round level) and then 94.30 (monthly high Nov.4 2020).