- The DXY is trading at levels last seen in April near 92.70.
- The sense of risk aversion continues to support demand for the dollar.
- Non-farm wages in June, the unemployment rate take center stage later.
the US Dollar Index (DXY), which values the greenback against a set of its main competitors, remains well placed and hits new highs in the 92.70 area on Friday.
NFP Focused US Dollar Index
The index extends the positive streak for another session at the end of the week and is trading new multi-month highs ahead of the release of major non-farm wages for June.
Indeed, the better-than-expected results of the ADP report and initial claims earlier in the week appear to have further lifted optimism over the NFP, at the same time strengthening sentiment around the dollar.
A positive result in the June payroll could add to the ongoing debate over the timing of the Federal Reserve’s cutback speech, which could be earlier than initially expected.
Later in the US data space, the consensus sees the economy adding 700,000 jobs in June and the unemployment rate falling to 5.7% over the same period. In addition, factory orders are expected to have risen 1.6% per month in May.
What to look for around USD
The index manages to reach new highs in the 92.70 region and remains poised to extend the uptrend in the near term. The recent shift in investor sentiment towards the dollar appears to be justified by the resumption of risk aversion amid pandemic concerns, strong fundamentals, high inflation and a declining outlook. Additionally, the likelihood that the Fed could change the bond buying program before anyone anticipated it and a possible rate hike in the second half of 2022 have contributed to the dollar’s reversal of late and especially after the latest FOMC event.
Key events in the United States this week: non-farm wages, unemployment rate, trade balance, factory orders (Friday).
Prominent problems on the rear boiler: Biden’s plans to support infrastructure and families, worth nearly $ 6 trillion. US-Chinese trade conflict under the Biden administration. Decrease in speculation vs economic recovery. US real interest rates relative to Europe. Could the US fiscal stimulus lead to overheating?
Relevant levels of the US dollar index
Now the index is gaining 0.16% to 92.67 and a breakout of 92.69 (July 1 weekly high) would open the door to 93.00 (round level) and finally 93.43 (high of 21 March 21). On the downside, the initial discord emerges at 91.51 (June 23 weekly low), followed by 91.43 (200-day SMA) and finally 89.53 (May 25 monthly low).