The DXY is up for the fifth day in a row, approaching April’s high.
Following mixed data, hawkish Fedspeak, and IMF comments, US Treasury rates are bouncing around the weekly bottom.
NFP is projected to put rate rise fears at bay, giving the greenback even more momentum.
During the early hours of Friday, the US dollar index (DXY) is hovering around 92.58. The dollar index vs six major currencies rose to a multi-day high the previous day, owing to increased speculation about the Fed’s next move and mainly strong US data.
In June, the US ISM Manufacturing PMI fell slightly from 61.00 projected and 61.2 prior readings to 60.6. This also includes information on the employment component, which fell to 49.9%, although the prices-paid sub-component increased to its highest level since 1979. Last week’s initial claims decreased to 364K, bringing the four-week average down to 392.75K, putting a damper on expectations for a robust NFP print in June, which is predicted to jump from 559K to 690K.
Following this information, Philadelphia Federal Reserve Bank President Patrick Harker told the Wall Street Journal that he believes the bond-buying program should begin later this year. His hawkish statements come ahead of comments from the International Monetary Fund (IMF) that predict an upward revision to 2021 GDP and rate raise calls in the second half of 2022, not to mention the commencement of tapering in early 2022.
It should be highlighted, however, that the market’s skepticism about the global economic recovery as a result of the newest Delta covid variant epidemic appears to be testing the DXY bulls lately. Fears that the crucial US jobs data, the NFP, will disappoint the markets and support the demand for easy money add to the USD bulls’ concerns.
The market’s hesitation, as reflected in US Treasury yields and stock futures, also poses a threat to the major US dollar index.
For the intermediate move, DXY bulls will keep a watch on the covid updates, but nothing will be more crucial than the NFP readouts, which are predicted to be 690K versus 559K previously. If the employment report continues to show a solid improvement in US labor conditions, the pressure on the Fed to change its monetary policy will grow, favoring USD purchasers.
Read: NFP Predictions: Four Reasons Why June’s Jobs Report Could Be Bad for the Dollar
Although a rising trend line from May tests DXY bulls at 92.70, bears are unlikely to be persuaded until the price remains above the 200-day moving average of 91.43./n
