US Dollar Index cautious, steady around 92.20 ahead of Payrolls
- DXY trades without direction in the 92.20 region on Friday.
- Yields of the key US 10-year note look consolidative near 1.30%.
- Markets’ attention will exclusively be on the August’s Nonfarm Payrolls.
The greenback navigates the lower end of the weekly range in the low 92.00s when tracked by the US Dollar Index (DXY).
US Dollar Index: It is all about the NFP
The index remains under pressure for yet another session, briefly dropping to new multi-week lows in the 92.20/15 against the backdrop of increasing cautiousness among traders ahead of the crucial Nonfarm Payrolls (750K exp.) due later in the NA session.
Other than the vigilant stance from market participants, the lack of traction in US yields also weigh on the dollar. Indeed, yields of the US 10-year note appears to have stabilized somewhat following the post-Powell drop around a week ago.
Furthermore, the upcoming release of August Nonfarm Payrolls remains crucial regarding a potential announcement of QE tapering. In fact, a positive surprise in the release would surely boost the likeliness that the Fed statement could signal the start of the tapering of the bond-purchase programme as soon as at this month’s meeting. In case Payrolls comes in short of expectations, that kind of announcements should wait to, probably, November or December.
Other than Payrolls, the US Services sector will be in the limelight following the releases of Markit’s Services PMI and the ISM Non-Manufacturing.
What to look for around USD
The index extends the post-Jackson Hole selloff to fresh lows in the vicinity of 92.20, where some contention seems to have emerged. In the meantime, and looking at the broader picture, support for the buck is expected to emerge in the form of delta concerns, high inflation, tapering prospects and the performance of the US economic recovery vs. its peers overseas.
Key events in the US this week: 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 up 0.02% at 92.23 and a break above 92.52 (55-day SMA) would open the door to 93.18 (high Aug.27) and then 93.72 (2021 high Aug.20). On the flip side, the next support aligns at 92.15 (monthly low Sep.3) followed by 91.78 (monthly low Jul.30) and finally 91.62 (100-day SMA).