US Dollar firm near 97.30, Fedspeak eyed

The greenback – tracked by the US Dollar Index – has started the week on a firm note vs. its G10 peers, extending the bounce off lows in the 97.00 neighbourhood seen last Friday.

US Dollar attention to Fedspeak, FOMC

After reaching fresh multi-month lows just below 97.00 the figure on Friday, dip-buyers seem to have emerged and are now pushing the buck to the area of daily highs around 97.30.

Yields in the US money markets are also recovering from recent lows and are lending extra oxygen to the Dollar’s up move.

USD gained some ground today as the recent effervescence in the US political scenario seems to have subsided somewhat following the ‘Russia gate’, while expectations of a Fed’s move at the June meeting are back to the fore. According to CME Group’s FedWatch tool, the probability of higher rates next month is at 78.5% based on Fed Funds futures prices.

On the positioning front, the greenback lost further ground during the week ended on May 16, as speculative net longs have retreated to the lowest level since early October 2016, as per the latest CFTC report.

Event wise today in the US, speeches by FOMC’s L.Brainard (permanent voter, centist), Philly Fed P.Harker (voter, hawkish) and Minneapolis Fed N.Kashkari (voter, dovish) should keep the attention on the buck ahead of the publication of the FOMC minutes on Wednesday.

US Dollar relevant levels

The index is gaining 0.18% at 97.17 and a break above 97.25 (high May 22) would open the door to 97.97 (high May 18) and finally 98.62 (20-day sma). On the flip side, the immediate support aligns at 96.97 (2017 low May 19) followed by 96.94 (low Nov.4 2016) and then 95.91 (low Nov.9 2016).