US Dollar Index clings to gains around 96.30
- DXY remains within the familiar range in the low-96.00s.
- US-China trade grabs all the attention ahead of the G-20 event.
- Final US Q1 GDP came in at 3.1%, in line with forecasts.
The US Dollar Index (DXY), which gauges the buck vs. a bundle of its main competitors, is gyrating around the 96.30 region amidst a generalized cautious trade as markets get ready for the G-20 event.
US Dollar Index focused on trade
DXY has quickly faded the earlier uptick to the boundaries of 96.40, as trade jitters re-emerged after President Trump threatened to impose extra tariffs on Chinese products, just two days ahead of his (supposed) meeting with China’s Xi Jingpin.
Trump’s comments hit US money markets as well, prompting yields of the key US 10-year note to recede from daily highs near the 2.07% level.
In the US docket, the final Q1 GDP figures showed the economy expanded at an annualized 3.1%, matching consensus, although GDP Price Index rose below expectations 0.6% QoQ (albeit bettering the previous 0.5% raise). Still in the US, Initial Claims rose at a weekly 227K, taking the 4-Week Average to221.25K from 219.00K.
Further out, the greenback is expected to remain under pressure in the next hours amidst month-end flows and the more relevant G-20 event, where all the attention is expected to gyrate around the Trump-Xi meeting. The outcome of this event should be viewed as a key driver for the price action in the global markets in the very near term.
What to look for around USD
Speculations of a rate cut as early as the next meeting have lost traction in past hours after Fed’s Powell remove some tailwinds from that idea supported by comments from member J.Bullard. The case, however, of lower rates in the near/medium term remains in place for the time being. The Fed is expected to keep the data-dependent stance intact while it continues to scrutinize the US-China trade situation and weakness overseas.
US Dollar Index relevant levels
At the moment, the pair is gaining 0.11% at 96.27 and faces the next hurdle at 96.39 (high Jun.27) followed by 96.58 (200-day SMA) and finally 97.34 (55-day SMA). On the other hand, a breach of 95.82 (low Feb.28) would open the door to 95.74 (low Mar.20) and then 95.16 (low Jan.31).