- The US Dollar Climbs to Around 108.40
- Higher yields were supported by the Fed’s hawkish move in December.
- The market is pricing in strong JOLTS and ISM data.
The U.S. dollar index (DXY), which measures the greenback’s strength against a basket of currencies, rose on Tuesday after two days of declines. The Federal Reserve’s hawkish bias has lifted U.S. bond yields, a positive development for the dollar. Strong jobs and services PMI data helped the dollar recoup losses ahead of December nonfarm payrolls data.
Market Movers: US Dollar Rebounds After Strong US Economic Report
- U.S. Treasury yields continued to rise, driven by a series of Treasury auctions this week, with the 10-year yield reaching 4.64% and the 30-year yield reaching 4.87%.
- Michael Barr, the Fed’s vice chairman for oversight, announced his early resignation effective Feb. 28, potentially avoiding legal problems in the next administration.
- The ISM Services Purchasing Managers Index rose to 54.1 in December, beating expectations of 53.3 from 52.1. Financial concerns were raised as payments jumped to 64.4.
- The Jobs and Employment Survey (JOLTS) showed 8.09 million job openings in November, up from 7.83 million in October and an estimated 7.7 million.
- ADP private payrolls, Challenger job cuts, and weekly jobless claims will round out this week’s labor market data before December Nonfarm Payrolls.
- Geopolitical tensions and a potential trade war have boosted safe-haven demand and kept the dollar from falling despite strong gains.
DXY Technical Analysis: Indicators Hold Strong Above Key Support
The US Dollar Index maintains its overall bullish pattern and technical indicators show upward momentum. Despite the weakness during the day, the US Dollar Index managed to hold onto its 20-day simple moving average (SMA), which signals significant support.
Whereas near-term overbought signals seem incite humble pullbacks, continuous request for US resources and higher yields may keep the record raised, notwithstanding any major hazard inversions.
