USD: Dollar is king, once again...but for how long?

Published date: 27/09/2019

So far, the Dollar has been the king of the week. We saw no change of momentum after the release of the QoQ figures of the US GDP, which shows a solid 2% increase in growth. DXY and major indices are trading near session highs, which triggers an alarm to be carefully monitoring the upcoming supply levels. 

DXY last significant high remains around the 99.30-99.50 level, the last time the index revisited that supply zone, several USD crosses went down more than 150 PIPs. The greenback is trading higher against all pairs but is closely approaching weekly resistances. 

US Gross Domestic Product shows that consumers are spending plenty, but the manufacturing sector is worried about an imminent economic downturn. Even a 2% growth rate between April and June is not keeping investors satisfied, as the rate was below Q12019 figures  (3%). Consumers represent around 70% of the US economy, that's why strong sales numbers are still the floor of the economic sentiment.  

Taking the data into account, the FED may or may not have reasons to favour easing. Investors must see the bigger picture: Personal Consumption Expenditure data is the “gold” indicator of all FOMC members..  On the other hand, the forecasted yearly growth remains under the 3% target of Trump’s administration, which can apply some pressure for further cuts. Washington is already putting into place a $1.5 Trillion Tax-cut package, as well as increasing its spending. 

Reviewing the report released today by the US monetary authorities, manufacturing and housing data remain weak, which could be the Achilles ankle for worse data in the upcoming quarters.  The labour market, on the contrary, is remarkable. Trump’s presidency has pushed the unemployment level to the lowest in 50 years! 

The next catalysts to take into account before trading any US crosses is the possible upcoming impeachment and the advancements in the US-China deal. 


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