DXY above 60, can it hold?
USD index still above 96, after sharp increasing to 96.65 and falling back to 96.82. Today again Mr. Powell will continue his testimony before the US House Committee on Financial Services, while PMI data and ADP Employment Change will be at the center of attention.
During testifying before the US Senate Banking Committee on Tuesday, Powell said that in the FOMC December meeting, they can discuss the pace of reductions in asset purchases to end it faster than earlier expectations.
This comment lifted the US dollar, while a few minutes later, when he repeated his latest comment about the rate hike, DXY again lost the ground. Powell believes that ending Asset purchases, does not mean that they can increase the rate much faster.
Also, he emphasized the Inflation risk, telling that it was time to stop using the term “transitory”, and even the latest coronavirus variant of “Omicron” can increase inflation, disrupt the recovery path and pause the labor market improvements.
After Mr. Powell, Treasury Secretary Yellen supported Biden’s plan and pointed out that his infrastructure bill can slow down inflationary pressures in the long run. On the other hand, she also warned about the debt ceiling.
If it defaults, the federal government may run out of cash after mid-December. Currently, Republican leader McConnell and majority leader Schumer are still discussing the issue of extending the debt ceiling, and they are expected to express their positions in the short term.
Wall Street’s main indexes suffered heavy losses on Tuesday but futures markets are trading with a 1.1% gain on average. Earlier, Asian markets closed higher with a 0.5% gain on average.
Since last days with increasing the chance of holding policy by FED was the main driver of chart bears, now FED tone again boosting the USD and holding its bulls in the chart. From the technical point of view, we can see strong support at 95.50 area, and holding this level, can stop the last days’ bears and lift the index again from here.