US Dollar keeps gains despite easing price pressures, uninspiring ECB rate decision – Crypto News

Share:

• The Greenback rallies for a third straight day this week.
• US yields continue to increase, nearing the 5% threshold again.
• The US Dollar Index edges up after breaking back above 106.00 and flirts with 107.00. 

The US Dollar (USD) keeps gaining territory against most major G10 currencies this Thursday. The biggest catalyst for this recovery is the bond market where US yields in the US 10-year benchmark have found their way back to a near 5%. At the other side of the Atlantic Ocean, the European Central Bank (ECB) issued a rate decision with no surprises, delivering a steady-for-longer stance while markets await more verbal guidance from ECB President Christine Lagarde up next. 

On the economic data front, no less than thirteen data points are set to be issued all at the same time, at 12:30 GMT. Amidst all that, the ECB will release its interest rate decision and statement and ECB President Christine Lagarde will give a press conference. Expect plenty of headlines to come out and very volatile moves in the US Dollar Index (DXY), in the EUR/USD pair and other major crosses where the Greenback is involved. 

Daily digest: US Dollar outpaces Euro

• The European Central Bank (ECB) has kepts its benchmark rates unchaged at 4%, issuing a statement that it will keep its rate steady for longer to battle against the elevated inflation levels in the eurozone. 
• At 12:30 GMT, a big batch of US data was released:
  1. Initial Jobless Claims came in at 210,000, an increase from 198,000. Continuing Claims went higher as well, from 1,727,000 to 1,790,000.
  2. Personal Consumption Expenditures (PCE) Price Index for the third quarter saw the Core Index dropping from 3.7% to 2.4%.
  3. Gross Domestic Product (GDP) data for the third quarter: the Price Index component went from 1.7% to 3.5%. The Annualised growth rate outperformed from 2.1% to 4.9%.
  4. Durable Goods preliminary reading for September: The headline index was a big beat on expectations, from -0.1% to 4.7%. The component without transportation was kept steady at 0.5% . 
• Near 12:45 GMT, ECB President Christine Lagarde is due to give a press conference with Q&A. 
• During that same press conference from the ECB, around 13:00 GMT, headlines or comments are expected from the Federal Reserve member Christopher Waller. 
• US housing data around 14:00 GMT, with Pending Home Sales: Sales are expected to decline 1.5% in September compared with the previous month, less than the 7.1% plunge seen in August. On an annual basis, Pending Home Sales declined 18.3% in August.
• The Kansas City Fed Manufacturing Index for October is expected around 15:00 GMT. The previous reading came at -13.
• The US Treasury will try to refund two tenors this Thursday: at 15:30 a 4-week bill to be auctioned, and at 17:00 GMT a 7-year note to be allocated. 
• Equities are seeing investors flee ahead of the volatility this Thursday: Asian equities are sinking over 1% in Japan and Chinese equities are down by 0.5%. European equities are not expecting any help from the ECB this Thursday, and are sliding more than 1% . In the US, Nasdaq futures fall by 1.5%, while Dow Jones and S&P 500 futures are down by 1%.
• The CME Group’s FedWatch Tool shows that markets are pricing in a 97.1% chance that the Federal Reserve will keep interest rates unchanged at its meeting in November. 
• The benchmark 10-year US Treasury yield trades at 4.98%, popping back to that feared 5% level. The million Dollar question here is what will happen once the benchmark breaks back above 5%.

US Dollar Index technical analysis: More room to go 

The US Dollar is climbing the ladder again after being in the gutter at the start of the week. The Greenback is on its way back to its throne as the DXY US Dollar Index is shooting higher and might even stretch further. Risk element hanging over a possible implosion of the DXY hangs in the balance, with the US 10-year yield flirting again with 5%.

The DXY has consolidated above 106.00 and looks to keep stretching higher. Look for a possible jump above 106.92. If this level can be reclaimed by US Dollar bulls, then look for 107.00 on the topside again. 

On the downside, the recent resistance at 105.88 did not do a good job supporting any downturn and now completely has lost its importance. Instead, look for 105.12, which is a pivotal historic line and almost falls in line with the 55-day Simple Moving Average (SMA) to keep the DXY above 105.00, and which worked already quite ahead of it on Tuesday. Should this level fail to do the trick, a big air pocket could develop and see the DXY drop to 103.74, near the 100-day SMA, before finding ample support.