DXY extends its recent gains and closes closer on recent highs.
Powell alluded to the possibility that high inflation could persist for a longer period of time.
Retail Sales, as measured by the U-Mich Index, increased in July, according to the TIC. On the tap, it flows next.
When measured by the US Dollar Index (DXY), the greenback extends its gains in the second part of the week, approaching monthly highs at 92.80.
The index rises for the second day in a row, trading closer to monthly highs in the 92.80/85 range, always on the back of renewed demand for the dollar, higher US rates, and after market players appear to have digested both of Chairman Powell’s testimonies.
On Thursday, Chief Powell reaffirmed his message to the Senate. He did, however, imply that rising inflation could last longer than expected, prompting the Federal Reserve to rethink its policy.
The Chicago Fed’s C.Evans indicated that tapering of the bond-purchase program may begin before the end of the year, while the St. Louis Fed’s J.Bullard called for the elimination of present emergency measures.
After bottoming out near 1.30 percent on Thursday, yields on the main US 10-year note have gained a few of basis points in the bond market.
The US docket is expected to be fascinating, with Retail Sales and a preliminary gauge of Consumer Sentiment for the month of July taking center stage, followed by TIC Flows in importance.
So far, the DXY rebound has flirted with monthly tops around 92.80, despite the strong purchasing bias surrounding the dollar. Meanwhile, the index’s upbeat outlook is supported by the strong pace of the economy’s recovery, higher-than-expected inflation numbers, and mounting rumors of rate hikes/QE tapering sooner than predicted.
This week’s major events in the United States include: Consumer Sentiment rose in July, indicating an increase in retail sales (Friday).
On the back boiler, there are a number of important considerations to consider: Biden’s multibillion-dollar infrastructure and family-support proposal. Under Biden’s administration, there was a trade war between the United States and China. Speculation tapering vs. economic recovery Real interest rates in the United States vs. Europe. Is it possible that the US fiscal stimulus will cause the economy to overheat?
The index is currently up 0.15 percent at 92.69, and a break over 92.84 (July’s monthly high) will lead to 93.00 (round level) and eventually 93.43. (2021 high Mar.21). The next down hurdle, on the other side, is at 91.51 (weekly low June 23), followed by 91.37 (200-day SMA), and lastly 89.53. (monthly low May 25)./n
