US Dollar Index advances to new 2021 tops near 95.30
- DXY adds to the recent rebound above the 95.00 mark.
- The US bonds market resumes the activity following Thursday’s holiday.
- Flash Consumer Sentiment for November, Fedspeak next on tap.
The greenback, when tracked by the US Dollar Index (DXY), extends the recovery further north of the 95.00 mark and records new YTD highs in the 95.25/30 band.
US Dollar Index looks to yields, data
The index is up for the third session in a row at the end of the week and looks to extend the recent breakout of the key barrier at 95.00 the figure on Friday.
The solid performance of the greenback remains well propped up by the “higher for longer” narrative around inflation, particularly after US consumer prices rose to the highest level since 1990 in October (as per Wednesday’s release).
The elevated inflation morphed into further upside pressure in US yields and feed into speculations that the Federal Reserve could act on rates sooner than initially anticipated.
In the US data space, the preliminary Consumer Sentiment gauge for the month of November will be the salient release later in the NA session along with JOLTs Job Openings and the speech by NY Fed J.Williams (permanent voter, centrist).
What to look for around USD
The index clocked new cycle highs past the 95.00 yardstick, area last visited in the summer of the coronavirus pandemic. The sudden change of heart in the dollar remains underpinned by rising yields and the firmer perception that the elevated inflation will be among us longer than anticipated, all this morphing into already rising speculations of probable interest rate hikes by the Fed as soon as in 2022.
Key events in the US this week: Flash November Consumer Sentiment (Friday).
Eminent issues on the back boiler: US-China trade conflict under the Biden’s administration. Tapering speculation vs. economic recovery. Debt ceiling debate. Geopolitical risks stemming from Afghanistan.
US Dollar Index relevant levels
Now, the index is gaining 0.03% at 95.18 and a break above 95.26 (2021 high Nov.12) would open the door to 95.71 (monthly low Jun.10 2020) and then 97.80 (high Jun.30 2020). On the flip side, the next down barrier emerges at 93.87 (weekly low November 9) seconded by 93.58 (55-day SMA) and finally 93.27 (monthly low October 28).