USD INDEX CLIMBS TO FRESH HIGHS AND TARGETS 106.00 AHEAD OF DATA, POWELL

The index adds to Tuesday’s strong gains and approaches 106.00.

Markets now price in a 50 bps rate hike at the March 22 event.

ADP report, Powell’s testimony next on tap in the calendar.

The greenback, in terms of the USD Index (DXY), maintains the bid tone well and sound and approaches the 106.00 zone on Wednesday.

USD Index looks at data, Powell

The index extends the upside momentum sparked in the wake of the first semiannual testimony by Chair Powell on Tuesday and trades at shouting distance from the 106.00 region.

Indeed, the dollar gathered fresh upside traction after Powell left the door open to a half percentage point interest rate hike at the Fed’s next meeting on March 22 and hinted at the idea that the ultimate interest rate will likely be higher than previously thought.

According to CME Group’s FedWatch Tool, the probability of a 50 bps rate raise later in the month is now at around 75%, from nearly 9% a month ago.

In the meantime, the US 2-year yields navigate above the 5% mark for the first time since June 2007, always amidst the broad-based move higher in the rest of the curve.

Data wise in the US, MBA Mortgage Applications are due in the first turn seconded by February’s ADP report, Balance of Trade, JOLTs Job Openings and the second semiannual testimony by Chief Powell, this time before the House Financial Services Committee.