- The US dollar index is held above 106.50 after the weak PMI data in the United States.
- The service sector in the United States was unexpectedly contracted in February, where feelings are weighed.
- Consumer morale decreases, while inflation expectations increase, adding pressure on the US dollar.
The US dollar index (DXY), which tracks the performance of the US dollar for six major currencies, has simple gains on Friday, circulating about 106.50. This slight recovery follows the data of the initial disappointing purchases index, indicating that the American economy no longer exceeds the euro area or other major economic blocs. The printing of the weakest services sector has been evaluated on the feeling of the market, although manufacturing gains provide some balance.
Daily Digest Market Movers: The US dollar carries gains despite the weak PMI data
- The PMI manufacturing excels on February 51.6 expectations, bypassing each consensus 51.5 and reading 51.2 January.
- The PISI Services PMI decreases to a decrease in 49.7, less than 53.0 forecasts and 52.9 January.
- The Michigan University’s morale has decreased to 64.7, 67.8 forecasting and previous reading.
- Consumer enlargement expectations increase for 5 years to 3.5 %, higher than 3.3 % consensus and previous reading.
- The markets continue to monitor the threats of customs tariffs, with a possible increase on the horizon during the weekend. Anything that can raise fears of a trade war between the United States and China may lose the dollar losses.
DXY Technical Outlook: Recovery attempts to reduce dumping momentum
The US dollar index has regained some traction, hovering about 106.50 as it tries to restore the simple moving average for 100 days (SMA) at 106.60. Despite moderate recovery, technical indicators remain in the Habboudia.
The RSI and the average medium rapprochement (MACD) show signs of a slight improvement but remain in negative areas. The next resistance level is located near 107.00, while support stabilizes about 106.00. A decisive break below the 106.00 threshold may confirm a short -term look.
Fed questions and answers
The monetary policy in the United States is formed by the Federal Reserve (Fed). The Federal Reserve has two states: to achieve price stability and enhance full employment. Its primary performance to achieve these goals is to adjust interest rates. When prices rise very quickly and inflation is 2 % higher than the Federal Reserve goal, it raises interest rates, which increases borrowing costs throughout the economy. This leads to the most powerful USD (USD) because it makes the United States a more attractive place for international investors to stop their money. When inflation decreases to less than 2 % or the unemployment rate is very high, the Federal Reserve may reduce interest rates to encourage borrowing, which weighs on the green back.
The Federal Reserve (Fed) holds eight political meetings annually, as the FOOC Open Market Committee (FOMC) evaluates economic conditions and takes monetary policy decisions. FOMC attends twelve officials of the Federal Reserve-the seven members of the Governor, the President of the Federal Reserve in New York, and four regional regional regional presidents, who serve for one year on a roundabout.
In extreme situations, the Federal Reserve may resort to a policy called quantitative mitigation (QE). QE is the process that the Federal Reserve increases significantly from the flow of credit in a suspended financial system. It is a non -standard policy scale used during crises or when inflation is very low. The Federal Reserve’s favorite federal weapon was during the great financial crisis in 2008. It includes the printing of the Federal Reserve more than dollars and their use to buy high -quality bonds from financial institutions. QE usually weakens the US dollar.
The quantitative tightening (QT) is the reverse process of QE, as the Federal Reserve stops buying bonds from financial institutions and the manager does not re -invest from mature bonds, to buy new bonds. It is usually positive for the value of the US dollar.
