The dollar index is trading steadily above 94.50 after rallying 0.51% overnight.
- On Thursday, DXY traded between 93.82 and 94.47, the level which it breached on October 13.
- US yields are attempting a minor recovery on Friday.
- Payrolls for October will be the focus of attention.
DXY fundamental forecast
On Friday, the dollar was on track for a second straight week of gains versus major rivals, ahead of vital US employment data that could influence when the Federal Reserve raises interest rates.
Focus on NFP
Ahead of the US Nonfarm Payrolls release for October, the index stays sidelined and follows the range-bound theme existing in the rest of the global markets.
Following significant losses on Thursday, rates across the curve in the US cash markets try a sluggish comeback.
Even as the Federal Open Market Committee announced a $15 billion monthly trimming of its $120 billion in monthly asset purchases, Fed Chair Jerome Powell indicated he was not in a hurry to raise borrowing prices.
The Fed has made a labor market recovery a precondition for raising interest rates. Economists expect the US non-farm payrolls report, published later on Friday, will show a 450,000 increase in employment in October, up from 194,000 in September.
In the United States, economists estimate the economy to have added 450K jobs in the previous month, while the unemployment rate is expected to drop to 4.7 percent.
US-China reopening of consulates
To mend fences, US Vice President Joe Biden and his Chinese counterpart Xi Jinping are expected to agree on restoring consulates closed last year.
Build Back Better Act
The House of Representatives is set to vote on Friday on President Joe Biden’s legislative plan, including a social policy, climate-change package, and bipartisan infrastructure plan.
The House of Representatives is set to vote on Friday on President Joe Biden’s legislative plan, including a social policy, climate-change package, and bipartisan infrastructure plan.
Key data releases from the US
On the calendar today, we have NFP and unemployment data.
What’s next?
Despite the knee-jerk in US rates, the index peaked around the 94.50 level on Thursday. This happens amid a resumed offered posture in the risk-associated sector.
Meanwhile, with the Fed meeting still fresh in investors’ minds, a cautious approach is likely in light of Friday’s non-farm payrolls.
Moreover, the greenback should continue to closely monitor the performance of US yields and the progress of current elevated inflation and views from Fed rate-setters on the likelihood that high prices will persist for longer.
Besides this, the economic recovery’s outcomes against the backdrop of unabated supply shortages and an equally unabated rise in coronavirus cases.
DXY technical analysis: bulls to stay in charge
DXY is well above the 100-day moving average on the daily chart, and the MACD is currently trading at its neutral level.
So far, the index has gained 0.15% since the start of the day. A break above 94.56 would open the door to 94.60. If it can cross that level, we’ll see the index touching 94.74. It was high on September 25, 2020.
