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US Dollar plummets to fresh weekly lows below 93.40 ahead of FOMC minutes

  • Durable good orders data comes in worse than market expectations.
  • US T-bond yields continue to weigh on the greenback.
  • FOMC's statement is expected to affirm December rate hike.

After staying confined in a tight range below the 94 mark, the US Dollar Index, which tracks the greenback against a basket of six trade-weighted peers, came under a relatively heavy pressure in the NA session and eased to its lowest level since November 15 at 93.35. As of writing, the index was at 93.38, losing 0.55% on the day.

Dismal data and T-bond yields drag the index lower

Today's data from the United States showed that new orders for manufactured durable goods contracted by 1.2% in October following a 2% increase in September and missed the market estimate of 0.3%. Although other data came in slightly better than the expectations, they failed to help the greenback stage a recovery. The weekly initial jobless claims eased to 239K from 252K while the University of Michigan Consumer Sentiment Index improved modestly to 98.5 from 97.8.

The yield on the 10-year US Treasury-bond is weighing on the greenback for the second day in a row as it loses 1% on the day at 2.337%. 

The next catalyst for the USD will be the release of the FOMC's November meeting minutes at the top of the hour. In a speech at New York University’s Stern School yesterday, the Federal Reserve's Chairwoman Janet Yellen argued that the Fed was “reasonably close” to its goals and should keep gradually raising US interest rates to avoid the dual pitfalls of letting inflation drift below target for too long, as noted by UOB Group analysts in a recent report. A hawkish tone from the FOMC, which could support the view of the Fed taking further tightening measures in 2018, could help the buck retrace its losses against its peers.

Technical levels to watch

Supports for the index align at 93 (psychological level/Oct. 20 low), 92.30 (Sep. 26 low) and 92 (psychological level). On the flip side, resistances could be seen at 94 (psychological level) ahead of 94.65 (Nov. 14 high) and 95.00/05 (psychological level/Oct. 27 high/Nov. 7 high). 

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