U.S. Dollar Index Turns South After Data But Posts Weekly Gain
The U.S. dollar, measured by the DXY index, came under pressure on Friday after the release of September’s Michigan Consumer Sentiment data, which disappointed investors.
At the time of writing, the DXY is trading little changed on the day at the 109.75 area, having erased daily gains that took the index to an intraday high of 110.26 earlier in the session. Still, the DXY is set to post a weekly gain of around 0.7%.
The University of Michigan released its Consumer Sentiment Index, which consists of a personal survey of consumer confidence in economic activity and shows a picture of whether or not consumers are willing to spend money. The index showed a modest improvement compared to the August reading but came in lower than expected at 59.5 vs. the consensus of 60. The 5-year Inflation Expectations slid in September from 2.9% to 2.8%.
Investors focus now turns to next week’s FOMC interest rate decision, the dot plot and Chair Powell’s press conference. The WIRP tool suggests that investors have already priced in a 75 bps hike while the odds of a 100 bps increase eased to 16%. Looking ahead, the swaps market is pricing a terminal rate of 4.5%, which increased sharply after Tuesday’s inflation report.
The weekly chart shows a clear bullish outlook as the DXY resumed its upward path. The positive outlook is not as clear in the daily chart as its indicator shows growing bearish momentum in the immediate short term.
The RSI holds a neutral slope above its midline, while the MACD printed a higher red bar today, indicating growing selling pressure.
On the downside, support levels are seen at the 109.55 area, followed by the 109.40 zone, and below the 20-day SMA, currently at 109.21. On the other hand, resistance levels stand at the 110.00 psychological mark, followed by the daily high of 110.26 and then the cycle high of 110.78.
At the time of writing, the DXY is trading little changed on the day at the 109.75 area, having erased daily gains that took the index to an intraday high of 110.26 earlier in the session. Still, the DXY is set to post a weekly gain of around 0.7%.
The University of Michigan released its Consumer Sentiment Index, which consists of a personal survey of consumer confidence in economic activity and shows a picture of whether or not consumers are willing to spend money. The index showed a modest improvement compared to the August reading but came in lower than expected at 59.5 vs. the consensus of 60. The 5-year Inflation Expectations slid in September from 2.9% to 2.8%.
Investors focus now turns to next week’s FOMC interest rate decision, the dot plot and Chair Powell’s press conference. The WIRP tool suggests that investors have already priced in a 75 bps hike while the odds of a 100 bps increase eased to 16%. Looking ahead, the swaps market is pricing a terminal rate of 4.5%, which increased sharply after Tuesday’s inflation report.
The weekly chart shows a clear bullish outlook as the DXY resumed its upward path. The positive outlook is not as clear in the daily chart as its indicator shows growing bearish momentum in the immediate short term.
The RSI holds a neutral slope above its midline, while the MACD printed a higher red bar today, indicating growing selling pressure.
On the downside, support levels are seen at the 109.55 area, followed by the 109.40 zone, and below the 20-day SMA, currently at 109.21. On the other hand, resistance levels stand at the 110.00 psychological mark, followed by the daily high of 110.26 and then the cycle high of 110.78.