DXY moves to 93.50, new YTD peaks, on Thursday
The US Dollar Index (DXY), which gauges the greenback vs. a bundle of its main rivals, reaches new 2021 highs around 92.50 in the second half of the week. The index trades in the positive territory since Monday and manages to clinch fresh highs in the mid-93.0os, area las visited in November 2020. Persistent risk aversion, higher volatility (as per Wednesday’s uptick in the VIX index) and rising speculations of QE tapering sooner than initially anticipated (in light of Wednesday’s FOMC Minutes) all weigh on the risk complex and sustain further the upside momentum in the buck. In addition, St. Louis Fed J.Bullard (2022 voter, dovish) advocated for QE tapering to end early in 2022 while adding that he sees interest rate hikes to start in Q4 2022. In the US data space, usual weekly Claims are due seconded by the Philly Fed Index and the Leading Index measured by the Conference Board.
The dollar trades in fresh tops vs. its peers following the publication of the FOMC Minutes on Wednesday, where the Committee acknowledged that the QE tapering is closer than previously expected and the “sustained further progress” in the labour market still needs to be met in spite of the persistent economic recovery. Further support for the buck comes in the form of fresh coronavirus concerns, high inflation and the soft note in the risk complex. Now, the index is gaining 0.29% at 93.42 and a break above 93.50 (2021 high Aug.19) would open the door to 94.00 (round level) and then 94.30 (monthly high Nov.4 2020). On the flip side, the next support is located at 92.47 (low Aug.13) followed by 92.31 (50-day SMA) and finally 91.78 (monthly low Jul.30).