US Dollar Index pushes higher and approaches 93.40
- DXY extends the advance to the vicinity of 93.40 on Monday.
- US 10-year yields recede from recent peaks beyond 1.38%.
- NAHB Index will be the only release in the NA calendar.
The greenback, in terms of the US Dollar Index (DXY), looks to extend the recent breakout of the key 93.00 barrier at the beginning of the week.
US Dollar Index remains firm, looks to FOMC
The index advances for the third session in a row on Monday and pushes further north of the key 93.00 hurdle following the softer note in the risk complex and amidst the corrective downside in US yields.
In the meantime, yields of the key US 10-year reference note retreat to the 1.35% area on Monday after climbing as high as the area beyond 1.38% in the wake of the better-than-expected August’s Retail Sales (released last week). Still on the US, Friday’s publication of the flash U-Mich index showed the Consumer Sentiment is expected to improve a tad in September to 71.0 (from 70.3).
The closely followed US 2y-10y yield gap showed the yield curve steepened by around 3 pts to 114 pts on Friday.
Later in the US docket, the only release of note will be the NAHB Index for the month of September.
What to look for around USD
The index keeps pushing higher and extends the recent breakout of the 93.00 yardstick on Monday. Tapering speculations, risk aversion, higher yields and some auspicious results from US fundamentals kept the upbeat mood around the buck unchanged in past sessions. While developments around the Delta variant and the impact on the economy should also underpin the upside momentum in the dollar, cautiousness among investors could spark some consolidation in DXY ahead of the key FOMC event later in the week.
Key events in the US this week: NAHB Index (Monday) – Building Permits, Housing Starts (Tuesday) – FOMC meeting, Existing Home Sales (Wednesday) – Initial Claims, Flash Manufacturing PMI, CB Leading Index (Thursday) – New Home Sales, Chairman Powell speech (Friday).
Eminent issues on the back boiler: Biden’s multi-trillion 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 gaining 0.11% at 93.35 and 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). On the flip side, the next down barrier emerges at 92.32 (weekly low Sep.14) seconded by 91.94 (monthly low Sep.3) and finally 91.78 (monthly low Jul.30).