US Dollar Index Kicks Fed Week Around Monthly High Above 93.00
- DXY remains in the spotlight amid a quiet start to the key week.
- The tantrum is looming despite mixed data and economic challenges caused by the Covid.
- Headlines From China Can Entertain Traders, In Tokyo, Beijing Questions Dynamic Traders.
The US Dollar Index (DXY) remains firmer around 93.25, the highest level since August 23, during Monday’s Asian session.
The greenback gauge remains in the spotlight after a two-week uptrend in a climate of risk aversion. However, pre-Fed anxiety and a public holiday in China, as well as Japan, have been limiting DXY momentum lately.
COVID-19 fears and gossip that the US Federal Reserve (Fed) will hint at a decrease during this week’s Federal Open Market Committee (FOMC) could be cited as the main catalysts for the latest DXY surge. . In addition, escalating tensions between China and Western allies, namely the United States, Australia and the United Kingdom, are also weighing on market sentiment and supporting the US dollar.
On Friday, Michigan’s US Consumer Sentiment Index preliminary readings for September fell below 72.20, expected at 71.0, but remained above the previous 70.30 readings. The same joins the previously released US Consumer Price Index (CPI) and cases of escalating Delta covid variants to challenge the Fed’s hawks.
However, firmer data on retail sales and factory exit inflation join hopes for further stimulus to challenge easy-money supporters. That said, Axios recently reported that US Senator Manchin was deferring the vote on President Joe Biden’s overall spending to 2022. On the contrary, US House Speaker Pelosi said he expected a bipartisan approach to settling the debt ceiling, according to Reuters.
While portraying the mood at risk, S&P 500 futures are falling 0.15% during the day at press time.
In the future, a light schedule at home and abroad, with the exception of Canadian federal elections, may restrict DXY movements. However, Fed-related discussions and covid updates may keep greenback traders entertained.
Read: Fed snapshot: Three ways Powell could lower the dollar, and none is the dot-plot
Bulls on the US dollar index may struggle between 93.20 and 93.45, including several highs marked since the highs of July and April 2021 respectively. The upper band of the Bollinger Line and Momentum slowness are also a challenge for buyers.