The US dollar index is unable to break 108.00 with the passage of feelings on the United States session and after the slow US retail sales
- The US dollar gets gains but refrains from adding more.
- The United States for permanent commodities is less than expectations.
- The US dollar index (DXY) struck the highest weekly level at 108.06 while trying to unify the highest level of 108.00.
The US dollar index (DXY), which tracks the performance of the US dollar against six different major currencies, revolves around 108.00 in the European session and rose more than 0.50 %. NVIDIA ROUT lost from Monday, as NVIDIA (NVDA) lost more than $ 600 billion in the market value at some point, playing in the hands of US President Donald Trump regarding his plan to impose a global tariff. The markets have even been shaken when T Trump called to gradually increase the global tariff plan, greater than 2.5 %.
On the economic data interface, all eyes revolve in the American Federal Reserve (Fed) and the European Central Bank (ECB), which will announce their first decisions in monetary policy this year on Wednesday and Thursday, respectively. Before these monetary policy meetings, a preliminary reading of permanent commodities was issued in December on Tuesday. Miss is somewhat great in both the title and reading without transferring challenging more bullish trend in DXY at the present time.
Daily Digest Market Movers: The American consumer says “No”!
- You will calm the Asian markets this week and the next. With the start of the new lunar year on Tuesday, Chinese merchants will return to the market on February 5.
- Domestic goods orders data came in December slow:
- Permanent merchandise orders by -2.2 %, and failed to match the positive sides by 0.8 % and less than -1.2 % of November.
- Domestic goods orders without transportation by 0.3 %, with a touch less than 0.4 % compared to -0.2 % in the previous month.
- At 15:00 GMT, US consumer confidence data (CB) will be released for January, which is expected to go to 105.7 out of 104.7. Regardless, the Richmond Fed manufacturing index for January must reach -8 of 10.
- The arrows see the early recovery booth and retreated to a flat after its sharp drop on Monday in NVIDIA (NVDA).
- The CME Fedwatch Tool provides an opportunity of 51.2 % that interest rates remain unchanged at the current levels at the May meeting, with the remaining 48.8 % opportunity to reduce prices in that month. Expectations are that the Federal Reserve (Fed) will continue to rely on data with uncertainty that may affect inflation during US President Donald Trump’s term.
- The return in the United States is traded for 10 years around 4.563 % and its recovery begins about the highest level of more than a year earlier this month by 4.807 %.
Technical analysis of the US dollar index: not convinced
Although the US dollar index (DXY) may recover on Tuesday, this does not mean that all the risks of the negative side are avoided. Although it returns to 108.00, rejection can occur again, causing the US dollar index to decrease to 107.59 or less. The RSI, which is still less than 50, supports the possibility of risk because it contains more space to move before reaching the conditions of sale.
The way to recover is still not over and needs more bullish direction. First, the psychological level of 108.00 should be recovered on a daily closure. From there, 109.29 (July 14, 2022, the height and the rise of the trend line) next to the losses last week. Moreover, the next ups in the next upward trend before progress remains more at 110.79 (September 7, 2022, high).
On the negative side, the simple moving average for 55 days (SMA) at 107.59 and 3 October 2023, a height of 107.35 as a dual safety feature to support the DXY price. Currently, this appears to be the RSI indicator (RSI) still has room for the negative aspect. Thus, search for 106.52 or even 105.89 as better levels for the US dollar bulls to engage in reflection.
US dollar index: daily chart
Common questions about inflation
Inflation measures an increase in the price of a representative basket for goods and services. The main inflation is usually expressed as a change in percentage on a month on a monthly (illiterate) basis on an annual (annual) basis. Basic inflation excludes more volatile elements such as food and fuel that can fluctuate due to geopolitical and seasonal factors. The basic inflation is the number that economists focus on and is the level targeted by central banks, which are assigned to maintaining inflation at a controlled level, and is usually about 2 %.
Consumer price index (CPI) measures changing commodity and services basket prices over a period of time. It is usually expressed as changing a percentage on a month basis on a monthly (illiterate) basis and on an annual basis (YOY). Core CPI is the number targeted by central banks as it excludes food and flying fuel inputs. When the basic consumer price index rises above 2 %, it usually leads to high interest rates and vice versa when less than 2 % is less than 2 %. Since high interest rates are positive for the currency, high inflation usually leads to a stronger currency. The opposite is true when the inflation falls.
Although it may seem intuitive, high inflation in a country pays the value of its currency and vice versa to reduce inflation. This is because the central bank usually raises interest rates to combat higher inflation, which attracts more global capital flows from investors looking for a profitable place to enter their money.
Previously, gold was the assets that converted investors into high times of inflation because they have maintained their value, and while investors will often buy gold for their safe properties in times of extremist turmoil in the market, this is not the case most of the time. This is because when inflation is high, central banks will put interest rates to combat them. The highest interest rates are negative for gold because it increases the costs of maintaining gold in assets that bear interest or placing money in the calculation of cash deposits. On the other hand, low inflation tends to be positive for gold because it leads to low interest rates, making the bright metal a more applicable investment alternative.
