US Dollar Index rebounds from lows, back near 98.60
- DXY extends the upside to the 98.50/55 band on Wednesday.
- Impeachment inquiry against Trump picks up pace.
- US housing sector, Fedspeak on the docket today.
The Greenback continues to recover ground lost on Tuesday and is now lifting the US Dollar Index (DXY) to daily highs above 98.50.
US Dollar Index now focused on Trump, data
The index dropped to fresh weekly lows near 98.30 on Tuesday after Democrat Speaker N.Pelosi announced the House will start a formal inquiry impeachment against President Trump.
Additionally on Tuesday, the Conference Board reported that Consumer Confidence retreated to 125.1 (from 134.2) for the current month, collaborating further with the correction lower in DXY.
Later today in the US docket, New Home Sales for the month of August are due along with MBA’s Mortgage Applications and the EIA report on crude oil inventories. In addition, Chicago Fed C.Evans (voter, centrist) will discuss Economy and Monetary Policy and Kansas City Fed E.George (voter, hawkish) will speak to the Senate Banking Panel on Payments System.
What to look for around USD
Market participants have already digested the recent FOMC event and appear to have shifted their focus to the US-China trade war once again. Domestic data in combination with politics and trade developments should be key in determining the next decision on rates after Fed’s Powell left the door open for extra easing along the road. However, the increasing dissent among FOMC members casts further clouds on the probability of extra stimulus at the upcoming meetings, leaving the outlook on interest rates quite mixed, to say the least. Looking at the broader picture, the positive view on the Dollar is still well underpinned by the solid US labour market, strong consumer confidence and spending and the auspicious pick up in consumer prices, all adding to the safe haven appeal and the status of ‘global reserve currency’.
US Dollar Index relevant levels
At the moment, the pair is gaining 0.23% at 98.56 a break above 99.10 (high Sep.12) would aim for 99.37 (2019 high Sep.3) and then 99.89 (monthly high May 11 2017). On the downside, the immediate support lines up at 97.86 (monthly low Sep.13) followed by 97.63 (100-day SMA) and finally 97.17 (low Aug.23).