USD Absorb Advances, Remains the Dominant Currency for the Week

Trading in the FX market is generally quiet today, however, the USD weakens somewhat, but it is still the strongest currency for the week. The yen is still in second place, with Sterling at third. The Australian Dollar, on the other hand, is the weakest, closely followed by the New Zealand Dollar. There is a combination of Euro and Swiss Franc. Gold goes through a period of consolidation as well, but it holds steady around 1850. WTI crude oil is clinging to the 80 handles with tenacity. The broad-based gain in the dollar is expected to continue with a good finish to the week.

After a quiet day on Thursday, the dollar gained ground against its peers today, with the 10-year US Treasury bond yield opening with a bullish gap and testing 1.6 percent. The US Dollar Index is maintaining near its 16-month high of 95.26 reached earlier in the day, as investors anticipate the Consumer Sentiment Index from the University of Michigan and the September JOLTS Job Openings report. The statistics on Industrial Production will be shown on the European economic docket. Investors will also pay special attention to inflation-related rhetoric.

At the close of the week, DXY extends the surge for another session, clinching new YTD highs in the 95.25/30 zone. For the time being, both the macro and technical outlooks favor further rises in the dollar.

However, as long as the index remains above previous highs in the mid-94.00s (October 12), it is predicted to rise to round levels of 96.00 and 97.00, with a more significant milestone at 97.80 on June 30, 2020. Looking at the big picture, the index’s bullish attitude remains intact above the 200-day SMA at 92.13.

USD Reigns Supreme Amid Inflationary Pressures

Following the announcement of the US CPI figures for October, the USD gained versus a number of its competitors yesterday. Given the lack of high-impact US financial data presented yesterday, the overall market attitude remained steady. On a fundamental level, we observe the melting of tensions in US-China relations, which began with the declaration of the two countries’ collaboration to cut emissions.

The issue may persist, though, since US Vice President Joe Biden and Chinese President Xi Jinping will address Pacific Rim, and if tensions in the two countries’ relationships lessen further, the USD may suffer a drop in value.

On the other hand, today’s markets may be more focused on the preliminary November University of Michigan job openings figure and the September JOLTS job openings figure. On the monetary front, we highlight New York Fed President Williams’ speech, and if he maintains the Fed’s customary narrative about inflation being temporary, we may see the USD fall due to the bank’s dovishness.