The US dollar index maintains weekly gains with the threat of tariffs during the weekend of Mexico and Canada
- The US dollar is merged before the closure of this week.
- The weekend is expected to be a events full of events with Saturday, as the United States has been appointed to impose a tariff on Mexico and Canada.
- The US dollar index (DXY) is away from 108.00 and lives near the highest new weekly level at 108.37.
The US dollar index (DXY), which tracks the performance of the US dollar for six main currencies and is currently trading in 108.35 at the time of writing this report, is heading on Friday after receiving a few rear winds before the weekend. The first wind comes from US President Donald Trump, who announced the first wave of definitions on Mexico and Canada. The Trump administration will impose a 25 % tariff on about 900 billion dollars of goods from Canada and Mexico, according to Bloomberg reports. The US President also threatened to impose a 100 % tariff on the BRICS countries if they tried to replace the US dollar with a new currency in international trade.
The second rear wind comes from the average difference between the United States and many other countries. For example, the German inflation version on Friday strengthened the price reduction of the prices of the European Central Bank (ECB). This pays a larger wedge between the United States and the European regions, providing stronger US dollars.
Unfortunately, the latest version of the PC PE for the month of December was unable to expand the scope of the difference at this rate. With almost all elements in the expectation line, the PCE version turns into an event.
Daily Digest Market Movers: The two may be difficult
- Asian markets remain calm this week because of the new lunar year, which started on Tuesday, as Chinese traders return to the market on February 5.
- It is expected to volatility and nervousness in the opening trade on Monday if US President Trump finally launched 25 % definitions on Canada and Mexico.
- On Thursday, Trump repeated his threat to impose a 100 % tariff on the BRICS countries if they tried to replace the US dollar (USD) with a new currency in international trade. Trump has published on Factsocial: “We will need a commitment from these hostile countries, it seems that it will not create a new BRICS, nor support any other currency to replace the great US dollar or will face a 100 % tariff,” and continued, “There is no chance for the pixels to replace the dollar The American in international trade, or anywhere else, should say any country trying to salute the definitions, goodbye to America! “
- Personal consumption price index (PCE) has been released for December:
- The monthly PCE address increased by 0.2 % from 0.1 % in November, as expected.
- The monthly PC jumped to 0.3 % of 0.1 % in the previous month, in line with estimates.
- The Chicago Procurement Manager Index for January has reached 39.5, a marginal Miss Queen at the Expected Forty, from 36.9 in the previous reading.
- Despite the threat of customs tariffs, the shares are positive with futures futures in the United States stipulated in a positive openness in the opening bell in New York.
- The CME Fedwatch tool is making 82.0 % tools to not change the price of the Federal Reserve Policy at its next meeting on March 19.
- The return in the United States is traded for 10 years about 4.51 %, as it rose up after reaching the lowest new level in January by 4.484 % on Thursday.
Technical analysis of the US dollar index: risks approach
The US dollar index (DXY) will face a fragile weekend while the markets remain closed to work until Monday morning in Asia. With the customs tariffs on Canada and Mexico as soon as possible on Saturday, merchants will not be able to move the positions until the Asian markets are opened, which means that the fluctuation has been increased to translation. Once the European session begins, dust will start stabilizing any event that takes place during the weekend, where DXY is expected to have signed between 107.30 to the downside and 109.30 in the upward direction.
Once you get the level of 108.00, the next level of re -losses is 109.30 (July 14, 2022, the height of the trend). 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 107.67 and 3 October 2023, a height of 107.35 is a double support for the DXY price. Currently, this appears to be the RSI indicator (RSI) still has room for the negative aspect. Thus, find 106.52 or even 105.89 as better levels.
US dollar index: daily chart
Common questions among central banks
Central banks have a major mandate is to ensure that there is a price stability in a country or region. Economics are constantly facing inflation or contraction when the prices of some goods and services fluctuate. High prices for the same goods mean inflation, and the continuous reduction of the same goods means shrinkage. The central bank’s mission is to maintain demand for queue by adjusting the policy price. For the largest central banks such as the American Federal Reserve (Fed), the European Central Bank (ECB) or the Bank of England (BOE), the mandate is to maintain inflation approximately 2 %.
The central bank has one important tool at its disposal to obtain inflation higher or less, and this is by changing the standard policy price, known as the interest rate. In the previous moments, the Central Bank will issue a statement of its policy price and provide an additional reason about the reason that remains or changes (cutting or walking). Local banks will adjust their savings rates and their lending rates accordingly, which in turn will make it difficult or easier for people to gain their savings or companies to obtain loans and provide investments in their business. When the central bank raises interest rates significantly, this cash tightening is called. When you cut its standard price, it is called cash reduction.
The central bank is often political independent. Members of the Central Bank Policy Council pass through a series of paintings and sessions before being appointed to the Policy Council seat. Every member of this council is often a specific condemnation of how to control the central bank for inflation and subsequent monetary policy. Members who want a very loose monetary policy, with low cheap lending rates, are called to increase the economy significantly while they are satisfied with a slightly higher vision of inflation than 2 %, “doves”. Members who want to see higher rates to reward savings and the desire to keep lighting on inflation at all times “hawks” will not be rest until inflation is at 2 % or less than 2 %.
Usually, there is a president or president who leads each meeting, who needs to create a consensus between hawks or doves and has the last saying when this is divided into a vote to avoid a 50-50 tie about whether the current must be modified. The president will often deliver speeches that can be followed directly, as the current monetary position and expectations are connected. The central bank will try to push its monetary policy forward without operating violent fluctuations in prices or shares or currency. All members of the central bank will direct their position towards the markets before the policy meeting occurred. A few days before a policy meeting was held until the new policy is connected, members are prevented from speaking publicly. This is called the obstruction period.
(This story was corrected on January 31 at 13:15 GMT to say, “The return in the United States for 10 years is trading about 4.524 %, and it rose after it reached the lowest new level in January by 4.484 % on Thursday.” 4.484 % on XXX.
