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US Dollar Index around 96.50 ahead of key data

  • The index retreats from yesterday’s tops near the 97.00 handle.
  • Yields of the US 10-year note find some support around 2.62%.
  • ADP report and ISM Manufacturing will be the salient publications today.

After climbing to the boundaries of the key 97.00 mark on Wednesday, the US Dollar Index (DXY) met some selling impetus and has receded to the mid-96.00s, where some decent support appears to have emerged.

US Dollar Index looks to risk trends, data

The index has started the year with a strong rebound from lows in the 95.80/60 band, all amidst a resurgence of the risk-off sentiment in the global markets, particularly following poor Chinese results from the manufacturing sector.

The prevailing risk aversion motivated investors to increase their demand for safer assets, government bonds among them, dragging yields of the US 10-year note to their lowest level in a year.

Today’s US calendar includes the publication of US private payrolls measured by the ADP report ahead of the key ISM Manufacturing.

What to look for around USD

Despite the impact on markets of the partial US government shutdown has remained marginal for the time being, the continuation of the current status quo could end up denting investors’ sentiment. In the meantime, unease around US-China trade dispute stays well and sound in spite of the upcoming visit of US officials to China in the next days. In addition, investors remain vigilant on the potential moves on rates by the Fed this year as well as the persistent criticism by President Trump to the Fed’s monetary policy.

US Dollar Index relevant levels

As of writing the index retreats 0.29% at 96.50 and a break below 95.99 (100-day SMA) would open the door to 95.82 (low Jan.2) and finally 95.65 (low Jan.1). On the upside, the next hurdle aligns at 96.78 (21-day SMA) followed by 96.95 (high Jan.20 and then 97.54 (high Nov.28 2018).

Gold clings to gains near $1290 area, 6-1/2 month tops

   •  Worries about global growth continue to underpin safe-haven demand.    •  A weaker USD provides an additional boost and remains supportive.  
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