The U.S. Dollar Index finally leapfrogged resistance at 103.60 after several previous failed attempts during August. The DXY is +0.39% today at 103.968 with traders now looking to re-test May’s high at 104.699. From a technical standpoint the dollar remains in a long-term downtrend if the DXY closes the month below 104.75. But 6 consecutive weekly gains are testing the short USD models.
The dollar is higher against 9/10 of the G10 pairs, the one exception being a 0.30% decline vs. JPY. USD/JPY is in its 8th day of rangebound trading, capped by a 146.56 high and 144.92 low.
Widening the dollar’s performance against the broader basket of majors hints at improving risk sentiment: ZAR +0.71%, MXN +0.22% and BRL +0.10%. USD/MXN is in its 5th consecutive daily decline following the candlestick star formation on Aug 16th, -1.59% over that time.
U.S. Treasury yields are lower with the benchmark 10-year yield currently 4.262%, reversing the previous 3 days’ worth of gains. Despite the lower yields, Fed Funds Futures are still implying a 32% probability of a 25-basis point hike at the Fed’s November meeting, and a less probable hike (12%) at the September meeting.
North American equity index futures are signaling a higher open today. The major European and Asian indexes are a mix of minor gains and losses.
The price of oil has gapped lower (today’s opening price was below yesterday’s low), and at $78.12/barrel is the lowest price since July 24th. Support is at $77/barrel. Gasoline prices have followed oil lower, -1.75% and the lowest since August 3rd. Hopefully prices at the pump will adjust just as quickly. Crude oil is -2.87% YTD while Gasoline is +11.34% YTD.
A steady stream of eight scheduled interviews and speeches by Fed officials begins tomorrow and continues through Friday as part of the Fed’s annual Jackson Hole Economic Symposium. The highlight will be Fed Chairman Powell’s speech tomorrow at 10:05am ET.
