DXY: on the verge of a new cycle in the dynamics of the dollar


At the beginning of today's European trading session, DXY futures fell to around 107.95, but then corrected, rising again to the zone above 108.00. At the time of publication of this article, they are traded near 108.33.

The reason for fixing long positions on the dollar was not very convincing statistics for the US, published last Tuesday, according to which the preliminary PMI indices for the manufacturing and services sector in the US (from S&P Global), as well as data on sales of new homes in the US, were disappointing heightened fears of a recession.


Today, a new driver may appear in the dynamics of the dollar: at 12:30 (GMT) the US Bureau of Economic Analysis will publish its updated forecast for GDP for the 2nd quarter and data on prices for personal consumption expenditures PCE (Price Index for Personal Consumption Expenditure), one of the main inflation indicators for the FOMC Fed officials.

Also at the same time, the US Department of Labor will publish a weekly report on the state of the US labor market with data on the number of primary and secondary claims for unemployment benefits. The state of the labor market (together with data on GDP and inflation) is a key indicator for the Fed in determining the parameters of its monetary policy.

Thus, at 12:30 will be published key indicators characterizing the current state of the US economy, which are also key for the country's central bank in determining the parameters of its monetary policy.

If the published data will disappoint market participants, then the decline of the dollar will intensify. It may also move into a medium-term correction phase, if tomorrow's speech by Fed Chairman Powell at the Jackson Hole forum is considered by market participants as "dove" in relation to the prospects for the monetary policy of the US central bank.

Thus, we may literally be on the verge of a new cycle in the dynamics of the dollar.

If today's publication of important US macro statistics does not disappoint investors, then the dollar will resume its growth, and after the breakdown of the local multi-month high of 109.20, reached earlier this week, the mark of 110.00 will become the next growth target for DXY.