US Dollar slips below 98, touches lowest level since early November
Hurt by today's dismal macro data from the United States, the greenback continues to print losses against its competitors, with the US Dollar Index, which tracks the greenback against a basket of six trade-weighted peers, dropping to its lowest level since Donald Trump's election victory on November 9. At the moment, the index is at 97.97, losing 0.84% on the day.
Although today's Building Permits and Housing Starts data usually don't have a major impact on the FX markets, the fact that they both recorded contractions was good enough of a reason for the investors to continue to sell the USD. On the other hand, Industrial Production in the U.S. expanded 1% in April but couldn't help the greenback limit its losses, suggesting that the markets are looking for excuses to move away from the USD ahead of June's FOMC meeting.
- US: Building permits in April were at 1,229,000, 2.5% below the revised March rate of 1,260,000
- US Industrial Production: Largest gain in three years - Wells Fargo
Despite the weak data, the CME Group FedWatch Tool's probability of a June rate hike remains stable above 73% on Tuesday as the U.S. T-bond yields remain resilient with the 10-year reference losing 0.3% and the 2-year reference staying flat around 1.3%.
Technical outlook
97.60 (Nov. 1 low) could be seen as the first technical support for the index ahead of 97.00 (psychological level) and 96.50 (Oct. 10 low). To the upside, resistances locate at 98.40 (May 8 low), 99 (psychological level) and 99.75 (May 11 high).
- Macro FX ideas on dollar basket style strategy - Westpac