US dollar index rises back toward 98.00, ends week sharply higher

The US dollar index rebounded on Friday and rose to test multi-month highs at 98.00. After having on Thursday the worst day in weeks, the DXY bounced to the upside rising from 97.60 to 97.99. The 98.00 handle again capped the upside. 

On Friday, the rise in the index was boosted by a rally of the greenback against European currencies and the yen. The dollar lost ground versus commodity currencies, that gained momentum in a risk-on environment across financial markets. 

The dollar index is about to post the highest weekly close since February amid rising expectation of a Federal Reserve rate hike before year-end and continues to hold a positive tone. From the level it had a week ago, it gained 1.50%. 

Relevant levels

To the upside, resistance levels could be seen at 98.05/10 (weekly high), 98.59 (Mar 3 high) and 99.00 (psychological). On the downside, the area around 97.45 is becoming a key support (Oct 12 & 13 low), the next support level could be seen at 97.15/20 ( Oct 7 high) and 97.00.

Friday’s data and next week 

Friday was the busiest day of the week regarding US data. The first round included the retail sales report that showed a 0.6% increase in September, rebounding after the 0.2% decline in August; the Producer Price Index annual rate stood at 0.7% in September. Later the University of Michigan Consumer Confidence index – preliminary – showed a decline from 91.2 to 87.1, significant below market consensus (91.9.).

Next week’s reports include Industrial Production (Monday), CPI (Tuesday), Housing starts, Beige Book (Wednesday), Existing Home Sales and Philly Fed (Thursday). Also, several FOMC members are scheduled to speak.

 

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