US Dollar Index: DXY renews multi-day top past 104.00 on upbeat early clues for Fed Chair Powell’s speech

• US Dollar Index takes the bids to refresh 11-week high after rising the most in a month the previous day.
• Mostly upbeat US data, hawkish comments from mid-rank Fed officials keep DXY buyers hopeful.
• Fed Chair Powell’s speech eyed as rejection of rate cuts, defense of “higher for longer rates” can keep Greenback firmer.
• Mid-tier US data, yields will also entertain intraday traders.

US Dollar Index (DXY) rises to a fresh high in 11 weeks as markets prepare for Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium during early Friday. Also helping the Greenback’s gauge versus the six major currencies are the recent statistics from the US, as well as the Federal Reserve (Fed) policymakers’ statements. With this, the DXY rose to the highest level since June 07, around 104.17 by the press time.

After witnessing the downbeat prints of the monthly PMIs for August, the US economic calendar flashed mostly upbeat signals on Thursday. That said, the US Durable Goods Orders for July marked the biggest slump since April 2020 by posting a -5.2% MoM figure versus -4.0% expected and 4.4% prior growth (revised). However, the Durable Goods Orders ex Transportation marked a positive surprise with 0.5% figures versus 0.2% market forecasts and previous readings. Further, the Nondefense Capital Goods Orders ex Aircraft also improved to 0.1% while matching the analysts’ estimations compared to -0.4% marked in June.

Additionally, the Chicago Fed National Activity Index for July improved to 0.12 from -0.33 prior whereas the Kansas Fed Manufacturing Activity Index for August was 12.0 versus -20.0 previous readings. On the same line, the weekly figures of the Initial Jobless Claims and Continuing Jobless Claims eased and signaled positive employment conditions.

Considering the data, former St. Louis Federal Reserve President James Bullard underpinned the US Dollar’s strength with his hawkish remarks. “The reacceleration could put upward pressure on inflation and thus makes it impossible for the Fed to start cutting rates anytime soon,” said Fed’s Bullard in an interview with Bloomberg. While Bullard was hawkish, Federal Reserve Bank of Philadelphia President Patrick Harker teased an end of rate hike trajectory whereas Boston Federal Reserve President Susan Collins defended a “higher for longer” bias for rates.

Elsewhere, US-China optimism appears to fade as the Chinese Commerce Ministry said in a statement on Thursday, “China will state its stance on economic and trade matters of concern,” while adding that they will push financial institutions to expand credit to businesses.  China’s Commerce Ministry also called on the US to cancel potential arms sales to Taiwan, which in turn flagged fears of geopolitical tension when US Commerce Secretary Gina Raimondo visits Beijing next week.

As a result, the pre-event anxiety joins the China woes to underpin the US Dollar’s haven demand. However, the sluggish performance of the US Treasury bond yields around 4.25% by the press time joining the mildly bid S&P500 Futures to test the DXY bulls.

Looking forward, Fed Chair Powell’s hawkish nature keeps the US Dollar Index bulls hopeful unless he signals the rate cuts next year.

Technical analysis

A clear upside break of the key resistance line stretched from early March, now immediate support around 103.50, directs US Dollar Index (DXY) bulls toward May’s peak of 104.70.