- DXY erases Tuesday’s advance and retreats to the 93.70 region.
- President Trump suddenly halted stimulus talks with Democrats.
- FOMC Minutes, Fedspeak coming up next in the calendar.
The greenback, in terms of the US Dollar Index (DXY), gives away part of Tuesday’s gains and recedes to the 93.60 region in the wake of the opening bell in Euroland on Wednesday.
US Dollar Index focused on politics, FOMC
The index extends the erratic performance so far this week and now fades part of Tuesday’s strong advance on the back of a mild recovery in the sentiment surrounding the risk complex.
The dollar reversed the initial pessimism on Tuesday and ended the session well into the positive territory after President Trump unexpectedly halted all discussions surrounding the potential stimulus bill with the Democratic party, which in turn supported investors’ shift to the safe havens.
in addition, US politics retakes centre stage after President Trump now appears (fully?) recovered after testing positive for coronavirus last week and is expected to resume the presidential campaign in the next hours. In addition, Trump said he will participate in the second presidential debate vs. Democrat nominee Joe Biden on October 15th in Florida.
In the US data space, weekly MBA’s Mortgage Applications are due seconded by the EIA’s weekly report on crude oil supplies. In addition, Richmond Fed Thomas Barkin (2021 voter, centrist), New York Fed John Williams (permanent voter, centrist), Minneapolis Fed Neel Kashkari (voter, dovish) and Chicago Fed Charles Evans (2021 voter, centrist) are all due to speak.
Closing the daily docket, the Federal Reserve will publish its minutes of the September meeting.
What to look for around USD
The index appears to be moving into a consolidative phase, always below the key 94.00 barrier. Occasional bullish attempts in DXY, however, are (still) seen as temporary, as the underlying sentiment towards the greenback remains cautious-to-bearish. This view is reinforced by the “lower for longer” stance from the Federal Reserve, hopes of a strong recovery in the global economy, the negative position in the speculative community and political uncertainty ahead of the November elections.
US Dollar Index relevant levels
At the moment, the index is losing 0.23% at 93.63 and faces the next contention at 93.34 (monthly low Oct.5) followed by 92.70 (weekly low Sep.10) and then 91.92 (23.6% Fibo of the 2017-2018 drop). On the other hand, a break above 94.20 (38.2% Fibo retracement of the 2017-2018 drop) would aim for 94.74 (monthly high Sep.25) and finally 95.05 (100-day SMA).