US Dollar trims losses, back around 94.70
US Dollar trims losses, back around 94.60
- DXY bounces off session lows on US yields rebound.
- Fed stayed unchanged yesterday, as expected.
- Focus on Trump’s announcement of Fed Chief.
- Republicans will introduce the tax bill.
The greenback, in terms of the US Dollar Index (DXY), is trading on the defensive in the second half of the week around the 94.65/60 band.
US Dollar attention to Trump, Fedspeak
The index has regained some buying interest following the rebound in yields of the key US 10-year reference, currently testing daily tops above the 2.37% handle after bottoming out in sub-2.35% area on Wednesday.
USD posted little reaction after the Federal Reserve kept its monetary status quo unchanged at yesterday’s meeting, matching the broad consensus. The Fed, at the same time, noted the temporary effects of recent readings due to hurricanes, and left the door open for extra tightening at the December meeting.
In fact, according to CME Group’s FedWatch tool, the probability of a rate hike by year-end is just above 98%, always based on Fed Funds futures prices.
In addition, USD should stay in centre stage as President Trump is expected to name the next Fed Chief at some point in the European evening/night, with Jerome Powell now the front-runner although market participants are not ruling out John Taylor yet.
Furthermore, Republicans are expected to introduce its tax reform bill in Congress later today after yesterday’s postponement.
In the US docket, challenger job cuts are next on tap seconded by initial claims and speeches by FOMC’s J.Powell (dovish, permanent voter), Atlanta Fed R.Bostic (2018 voter, centrist) and NY Fed W.Dudley (permanent voter, centrist),
US Dollar relevant levels
As of writing the index is losing 0.09% at 94.68 and a breakdown of 94.27 (high Oct.6) would expose 94.03 (23.6% Fibo of the 2017 drop) and finally 93.48 (low Oct.26). On the other hand, the next up barrier is located at 95.15 (high Oct.27) followed by 95.90 (38.2% Fibo of the 2017 drop) and then 96.76 (200-day sma).