US Dollar Index under pressure near 93.00, focus on Jackson Hole
- DXY alternates gains with losses around the 93.00 level.
- The Jackson Hole Symposium kicks in, Powell speaks on Friday.
- Advanced Q2 GDP, weekly Claims next on tap in the US docket.
The US Dollar Index (DXY), which gauges the greenback vs. a bundle of its main rivals, trades in the lower end of the recent range around the 93.00 zone on Thursday.
US Dollar Index looks to Jackson Hole
The index attempts a recovery after four consecutive daily pullbacks and attempts to stabilize around the 93.00 yardstick in a context where risk trends remain mixed ahead of the key Jackson Hole Symposium on “Macroeconomic Policy in an Uneven Economy”.
The salient point of this event will be the speech by Chief Powell on “The Economic Outlook”, where investors will pay close attention to any hint at the potential timing when the Federal Reserve starts trimming its bond-purchase programme, as well as a probable move on interest rates.
In the meantime, US 10-year yields finally advanced past the 1.30% level in the wake of Wednesday’s Durable Goods Orders and a better tone in the risk complex.
In the US data space, another revision of the Q2 GDP will take centre stage along with usual weekly Claims and the Kansas Fed Manufacturing Index.
What to look for around USD
After recording new 2021 highs in the 93.70 region last week, the dollar sparked a corrective downside that met decent contention near 92.80 for the time being. The constructive performance of the dollar, in the meantime, has been further reinforced following the publication of the FOMC Minutes, where the Committee acknowledged that the QE tapering is closer than previously expected and the “sustained further progress” in the labour market still needs to be met in spite of the persistent economic recovery. Further support for the buck comes in the form of fresh coronavirus concerns, high inflation, higher real yields and the soft note in the risk complex.
Key events in the US this week: Flash Q2 GDP, Initial Claims (Thursday) – Jackson Hole Symposium, PCE, Personal Income/Spending, Advanced Goods Trade Balance, Final Consumer Sentiment (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. Potential hint at the timing of QE tapering at the Jackson Hole Symposium. Geopolitical risks stemming from Afghanistan.
US Dollar Index relevant levels
Now, the index is gaining 0.09% at 92.91 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 other hand, the next support comes in at 92.80 (weekly low Aug.24) followed by 92.47 (low Aug.13) and finally 91.78 (monthly low Jul.30).