The U.S. dollar index is +0.30% today, starting what could be its 5th weekly consecutive gain, +3.27% since the week ending July 14th. Holding above the 200-period moving average support at 99.54 was the turning point for the dollar, and traders are now eyeing upcoming resistance at 104.50, 1.28% higher than the current 103.181. A monthly close above 103.572 could signal a new trend in dollar strength, reversing the dollar’s current downtrend, in place since October 2022.
Dollar gains are spread across the full list of major currencies, with the primary gains coming against commodity and emerging market pairs: +0.88% vs. SEK, +0.66% vs. NOK, +0.52% vs. ZAR, +0.47% vs. BRL, and +0.45% vs. KRW.
Oil prices are -1.51% in trading today at $82.02/barrel. But even with today’s decline, oil remains in a well-defined uptrend, gaining 18.59% since the June 23rd close. With that size of short-term gain, some profit taking can be expected.
U.S. Treasury yields are higher, primarily in the ‘middle’ tenors again (2-7 years). Last week’s CPI and PPI (consumer and producer inflation data) has begun to shift market expectation for additional Fed rate hikes, the probability of a November hike at the FOMC’s November 1st meeting now at 29.5%, it’s highest reading in the recent rate cycle.
Economic data for the U.S. this week includes Retail Sales, Empire Manufacturing, Mortgage Applications, Housing Starts, FOMC Meeting Minutes, and Industrial Production. Canada will see CPI data tomorrow (expected to have moved higher). And Mexico releases Retail Sales figures on Friday