DXY Index (USD) Holds Ground as Fed Hawks Eye off US CPI. New Highs Ahead?

DXY Index, US Dollar, Fed, FOMC, US CPI, Crude Oil – Talking Points

  • USD underpinned by greater yields throughout the curve on impending Fed motion
  • APAC equities decrease as actuality of cyclical peak in free coverage turns into obvious
  • All eyes on US CPI knowledge.Wailing the DXY index break topside resistance?

The US Dollar continues to climb within the aftermath of a Fed that’s now focussed on combating inflation. US CPI would be the launched later at this time and the year-on-year headline quantity is predicted to come back in at 8.4% with core anticipated to print at 6.6%.

The fallout of upper borrowing prices is gyrating via markets, with equities and bonds promoting off in unison. The age-old adage of, “Sell in May and go away, come back on St. Leger’s Day,” may need arrived a month early.

This is essentially on the again of the persevering with procession of Fed audio system speaking up their hawkish credentials. Last night time it was Chicago Fed President Charles Evans flip, opening the potential for a 50 basis-point hike on the subsequent Federal Open Market Committee (FOMC) assembly in May.

As a consequence, the whole Treasury curve has been smashed as yields go greater. The benchmark 2- and 10-year notes are at 2.54% and a couple of.82% respectively, on the time of going to print. This is a great distance from the inversion between the 2 to begin this month.

There has been hypothesis in some quarters of the market that if the Fed is planning to cut back its stability sheet, the 10-year a part of the curve is perhaps the place they might begin.

APAC money equities had been all within the purple, following on from Wall Street’s lead. Futures markets are pointing to a unfavorable begin for the US.

Crude oil has recovered a few of yesterday’s losses, with each WTI and Brent crude oil futures contracts up round 2% in Asian commerce at this time.

Gold has held onto to current positive factors, at the moment just below US$ 1960 an oz.

The US Dollar index (DXY) has appreciated every single day this month, however total forex markets had been pretty quiet in Asia.

The notable appreciation of the Swiss Franc over the Japanese Yen within the prior session held. The oil dependent Norwegian Krone recovered a few of yesterday’s losses, consistent with the restoration in crude.

Looking forward, US CPI will likely be centre stage, however markets may even be watching the discharge of OPEC’s month-to-month oil report and Fed audio system Brainard and Barkin will likely be making headlines.

The full financial calendar could be considered right here.

DXY (USD) Index Technical Analysis

The US Dollar index, represented by the DXY index, continues to understand and will check resistance on the peaks of April and May 2020 at 100.556 and 100.931 respectively.

On the draw back, close by assist could lie on the break-out factors of 99.418 and 99.323.

Bullish momentum may evolve additional with the 10-, 55- and 100-day easy transferring averages (SMA) under the value and exhibiting constructive gradients.


Chart created in Buying and sellingView

— Written by Daniel McCarthy, Strategist for

To contact Daniel, use the feedback part under or @DanMcCathyFX on Twitter

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