- The index will advance to multi-week highs north of 104.00.
- Concerns about the debt ceiling remain on the rise.
- Flash Q! GDP, weekly claims and housing data will take center stage later.
A dollar as far as USD Index (DXY)for the first time since mid-March, it extends growth beyond 104.00.
USD Index looks at debt ceiling, data
The index rose for a fourth straight session and maintained a positive streak for a third straight week on rising concerns about the US debt ceiling.
House Speaker McCarthy expressed some optimism that a deal could be reached by June, although the country’s AAA rating was downgraded by Fitch late Wednesday, raising concerns.
In the US data space, the usual weekly Initial Claims are due, supplemented by further revisions to the Q1 GDP growth rate, Pending Home Sales and the Chicago Fed National Activity Index.
What to look for around USD
The index continues its inexorable northward march, breaking through Thursday’s 104.00 mark, or new multi-week highs.
Meanwhile, falling bets that the Fed is likely to suspend normalization in June appear to be supported by continued resilience in key U.S. basics (mainly employment and prices) amid continued rally in US yields and DXY.
The Fed’s preference for a pause instead appears to be an additional tightening of credit conditions in response to uncertainty surrounding the US banking sector.
This week’s key events in the US: Initial Unemployment claimsChicago Fed National Activity Index, Pending Domestic Sales, Advanced Q1 GDP Growth Rate (Thursday) – PCE/Core PCE, Durable Goods Orders, Flash Merchandise Trade Balance, Personal Income/Expenditure, Final Michigan Consumer Sentiment (Friday) .
Eminent problems on the rear boiler: The ongoing soft/hard landing debate for the US economy. Terminal interest rate near peak vs. rate cut speculation in late 2023/early 2024. Fed pivot. Geopolitical effervescence vs. Russia and China. US-China trade conflict.
USD Index of the relevant level
Now the index is up 0.17% at 104.05 and a break above 105.00 (round level) could open the door to 105.71 (200-day SMA) and then 105.88 (2023 March 8 high). On the downside, further support appears at the 100-day SMA at 102.85, seconded by the 55-day SMA at 102.44, and finally at 101.01 (weekly low of April 26).