US Dollar Lifts Within the Range as Fed Hikes Eyed on Solid NFP. Can DXY resume the uptrend?

US Dollar, USD, DXY, Fed, Treasuries, RBA, AUD, Bank of England – Talking Points

  • The US Dollar is being underpinned by higher rates across the curve
  • APAC equities move higher, joined by the Australian Dollar ahead of the RBA
  • Speculation of more rate rises from the Fed is in view.Will USD get a boost?

The US Dollar held gains from Friday in the Asian session to start the week. A robust jobs report to end last week lifted the greenback and the odds of more than one 50 basis-point (bp) hike from the Fed is creeping into trader’s minds.

Treasuries have continued their slide on Monday with all notes from 5-years out now yielding around 3 bp more than the close on Friday. This has seen the 2-10’s curve inch up to positive 6bp.

APAC equities are all in the green with the Hong Kong and mainland Chinese indices enjoying a lift of over 1%.

Crude oil is pretty much flat going into the European session, while gold has softened a touch to be near US$ 1917 an ounce.

Currency markets have had a quiet day, although the Australian Dollar was slightly firmer ahead of the RBA monthly monetary policy meeting tomorrow.

The market expects them to leave rates unchanged at 0.10%. They have previously said that they will wait for first quarter CPI data before adjusting rates. CPI is due out April 27th.

Any commentary on their plans for the assets they purchased during the pandemic will be closely watched. The consensus view of the market is that are likely to let them roll off, rather than dump them.

We are due to hear from Bank of England’s Governor Andrew Bailey and Deputy Governor Jon Cunliffe today. After that, the US will see factory orders and durable goods orders numbers, while Canada will get building approvals data.

The full economic calendar can be viewed here.

US Dollar Index (DXY) Technical Analysis

The US Dollar index (DXY) been in a tight range for a month as it consolidates above an ascending trend line.

In that period, it bounced off the low at 97.71 four times and that level might continue to provide support.

Below there, the 100-day simple moving average (SMA) could provide support, currently at 96.61. Just below that SMA is an ascending trend line, which may provide support, presently dissecting at 96.50.

The recent highs provide a potential resistance zone at 99.32 to 99.42. A break above there may see a test of the April and May 2020 peaks of 100.556 and 100.931 respectively.

Chart created in TradingView

— Written by Daniel McCarthy, Strategist for DailyFX.com

To contact Daniel, use the comments section below or @DanMcCathyFX on Twitter

Be the first to comment

Leave a Reply

Your email address will not be published.


*