USD Index extends the advance beyond 113.00

• The index pushes higher and surpasses the 113.00 mark.
• US money markets are closed due to the Columbus Day holiday.
• FOMC’s Evans, Brainard will speak later in the NA session.

The greenback, when tracked by the USD Index (DXY), maintains the bid bias well and sound for yet another session and trespasses the 113.00 barrier on Monday.

USD Index cautious ahead of CPI

The index advances for the fourth consecutive session at the beginning of the week in a context favourable to the risk-off trade, while market participants continue to digest Friday’s release of US Nonfarm Payrolls (+263K).

In the meantime, investors keep favouring the dollar amidst firmer speculation of a large rate hike at the next Fed event on November 2. This view has been bolstered further by recent solid results from some US fundamentals as well as the persevering hawkish message from Fed rate-setters.

Nothing scheduled in the US docket on Monday should leave the attention to speeches by Chicago Fed C.Evans (2023 voter, centrist) and Vice Chair L.Brainard (permanent voter, dove).

What to look for around USD

The index rises to fresh multi-session highs on the resumption of dollar strength in the wake of the solid results from the US labour market.

In the meantime, the firmer conviction of the Federal Reserve to keep hiking rates until inflation looks well under control regardless of a likely slowdown in the economic activity and some loss of momentum in the labour market continues to prop up the underlying positive tone in the index.

Looking at the more macro scenario, the greenback also appears bolstered by the Fed’s divergence vs. most of its G10 peers in combination with bouts of geopolitical effervescence and occasional re-emergence of risk aversion.

Key events in the US this week: MBA Mortgage Applications, Producer Prices, FOMC Minutes (Wednesday) – Inflation Rate, Initial Jobless Claims (Thursday) – Retail Sales, Flash Michigan Consumer Sentiment, Business Inventories (Friday).

Eminent issues on the back boiler: Hard/soft/softish? landing of the US economy. Prospects for further rate hikes by the Federal Reserve vs. speculation of a recession in the next months. Geopolitical effervescence vs. Russia and China. US-China persistent trade conflict.

USD Index relevant levels

Now, the index is gaining 0.25% at 113.02 and faces the next resistance at 114.76 (2022 high September 28) seconded by 115.00 (round level) and then 115.32 (May 2002 high). On the other hand, a breach of 110.05 (weekly low October 4) would open the door to 109.35 (weekly low September 20) and finally 107.68 (monthly low September 13).