US Dollar Index finds a minor pullback towards 100.30 on uncertainty over the long weekend

• The DXY sees resumption in the rally after a minor pullback to 100.30 in late New York.
• Tightening bets from worldwide central banks have brought a rebound in the US Treasury yields.
• An unexpected improvement in the US Consumer Confidence pushed the mighty greenback higher.

The US dollar index (DXY) has witnessed a minor correction towards 100.34 in the late New York session from its yearly high at 100.76. Earlier, the DXY displayed a strong rebound from Thursday’s low at 99.60. It seems that the DXY traced the rebound in the 10-year US Treasury yields, which recovered its two-day losing streak and reclaimed a three-year high at 2.83%.

Tightening bets push yields higher

The campaigning of reducing liquidity in the economy to combat the risks of soaring inflation has pushed the US Treasury yields higher. Every other central bank is tightening its policy to corner the inflation mess. A 50 basis point (bps) elevation in the interest rates by the Reserve Bank of New Zealand (RBA) and Bank of Canada (BOC) has cleared the intention of war against inflation. Although the European Central Bank (ECB) has kept its interest rates unchanged, the indication of ending the ‘Asset Purchase Program’ has reflected its mindset of squeezing liquidity from the economy.

Higher-than-expected US Consumer Confidence strengthens DXY

A higher reporting of the Consumer Sentiment Index (CSI) by the University of Michigan has infused fresh blood into the DXY. The Michigan CSI has landed at 65.7 and has outperformed the market consensus of 59 and prior print of 59.4. Higher confidence of consumers in the US economic activities despite galloping inflation, uncertainty over the Ukraine crisis, and supply chain disruption has shocked the Fx domain and henceforth has strengthened the mighty greenback.

Key events next week: Building Permits, Housing Starts, Initial Jobless Claims, and S&P Global PMI.

Eminent issues on the back boiler: Russia-Ukraine Peace Talks, International Monetary Fund (IMF) meeting, and Bank of England (BOE) Governor Andrew Bailey speech.