The US Dollar is trading sideways, seemingly unfazed by the news from China regarding the ramping up of bond sales next year. The US Dollar Index (DXY) is hovering above 108.00, nearly reaching a fresh two – year high.
Chinese Bond Sale Impact
Chinese policymakers plan to sell a record 3 trillion yuan worth of special treasury bonds in 20 This news, which could potentially boost China’s sluggish economy, has not significantly affected the US dollar’s movement.
US Economic Calendar
On Tuesday, the economic calendar is light. The Philadelphia Fed Non – Manufacturing Activity Index and the Richmond Fed Manufacturing Index for December are among the few data points. The manufacturing sector in the US is showing signs of contraction, with the Richmond Fed Manufacturing Index at -10, below the -9 expected and down from -14.
Market Movers
The news from China has led to a surge in Asian equities, while European markets seem to be struggling to benefit from this tailwind. US futures are in the green.
Fed’s Policy outlook
The CME FedWatch Tool for the first Fed meeting in 2025 on January 29 shows a 91.4% chance of a stable policy rate, with a small 8.6% chance of a 25 – basis – point rate cut. The US 10 – year benchmark rate is at 4.59%, the high of last week.
Technical Analysis
The US Dollar Index (DXY) is trading in a narrow range. A trend line from December 28, 2023, is acting as a moving cap. The next resistance level is at 109.29, which was the peak on July 14, 2022. Once this level is breached, the 110.00 round level comes into play. On the downside, the first barrier is at 107.35, which has now turned from resistance to support. The second level that could halt any selling pressure is 106.52, and even 105.53 could be considered, with the 55 – day Simple moving average (SMA) at 105.23 moving up towards that level.
Related topics:
Japan Faces Record Bond Supply as Central Bank Tightens Grip on Balance Sheet
Dollar Holds Steady as U.S. Inflation Moderates, Yen Nears Intervention Threshold
GBP/USD’s Reaction to US Data and BoE Move: A Rebound with Constraints
