US Dollar price action has rallied 1.20% in EUR/USD over the past two days.
Traders will be looking for any headlines in the run-up to the Jackson Hole Symposium later this Thursday.
US Dollar Index strength got sponged over after weak US PMI numbers.
The US Dollar (USD) is back to square one against most peers and trades around the opening price of Monday in plenty of G10 crosses. The whipsaw moves these past few days must have hurt both parties that were trying to take positions before the main event taking place later this Thursday and Friday with the annual Federal Reserve (Fed) Jackson Hole Symposium. The crème-de-la-crème of central bankers from developed countries will be convening to discuss and evaluate what to do next with these elevated rates and inflation not yet being near its projected target.
A big slew of data arrives Thursday with the risk that after the contractionary numbers from the latest US PMI on Wednesday, the Durable Goods data this afternoon could dampen the recent positive tone even more and dent economic confidence in the US. Once at 14:00 GMT, the Jackson Hole Symposium is set to start. Thus be on the lookout for any comment from non-Fed central bankers making statements that could trigger a substantial move in other currencies against the Greenback. Traders will be bracing for an eventful 48 hours to come.
Daily digest: US Dollar will be all over the place
All eyes on Jackson Hole headlines around 14:00 GMT with several top central bankers of developed countries lined up to make comments and possibly hint at crucial changes in their monetary policy. Expect any fallout not only to be limited to the Greenback, but to other currencies as well.
Before the Fed Symposium kicks off, at 12:30 GMT a big batch of data gets released.The most important is the preliminary US Durable Goods orders for July. Expectations are: Ex Transportation to head from 0.5% to 0.2%; Ex. Defense previous print was 6%, no projection pencilled in; and the overall Goods Orders index to head from 4.6% to -4%.
And as if that is not enough, the weekly jobless data will be released as well at 12:30 GMT with initial claims to head higher from 239K to 240K. The continuing claims are expected to head from 1.716M to 1.708M.
The data set for this Thursday is expected to close off with the Kansas Fed Manufacturing Activity remaining steady from -11 to -10.
This Thursday the US Treasury is heading to auction a 4-week bill and a 30-year TIPS issuance.
The BRICS convention invites Saudi Arabia and other countries to join the bloc.
Equities are up across the board after Nvidia earnings substantially beat expectations after the US closing bell on Wednesday. The Japanese Topix index is up 0.40% at the close, Hong Kong’s Hang Seng index is up nearly 2%. In Europe stock markets are in the green overall near 1%. In the US futures the Nasdaq is leading the charge, up 1.2%.
The CME Group FedWatch Tool shows that markets are pricing in an 86.5% chance that the Federal Reserve will keep interest rates unchanged at its meeting in September.
The benchmark 10-year US Treasury bond yield trades at 4.19% after touching a new yearly high on Thursday. The bond market will be very sensitive to any news on Thursday and Friday at the Jackson Hole Symposium. The whole US yield curve could move up or down depending on the speech from Fed Chair Jerome Powell.
US Dollar Index technical analysis: Planting a flag
The US Dollar almost had its hand around that 104-handle in the US Dollar Index (DXY) before taking the contraction in US PMI numbers on the chin. The DXY plunged like a failed jelly cake and closed out Wednesday in the red. Though US Dollar bears should not flaunt their success just yet, DXY bulls are nicely consolidating their positions above the 200-day Simple Moving Average (SMA) before the next attempt to reach 104.
On the upside, as you could have guessed from the above paragraph, 104.00 is the first nearby target. The high of Friday at 103.68 is vital and needs to get a daily close above it in order for the DXY to eke out more monthly gains. Should this US Dollar strength persist for the last part of this year, May’s peak at 104.70 could become the reality again.
On the downside, several floors are likely to prevent a steep decline in the DXY. The first one is the 200-day Simple Moving Average (SMA) at 103.16, which already broke on Monday and Tuesday, though it held on the implosion Wednesday. Passing below the 103.00 figure, some room opens up for a further drop. However, around 102.38 both the 55-day and the 100-day SMAs await to backstop the pairs
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