Dollar Index Fails To Hold On Above 97.0 Handle

Greenback’s appeal was diminishing throughout last week, with the dollar index recording losses for five consecutive trading days and trading below its 97.00 psychological zones. The losses suffered were due to multiple events and economic data last week. 

Earlier last week, the dollar index was initially pressured by weak CB Consumer Confidence data which signaled a pessimistic consumer spending in the US. Besides that, the Federal Reserve rate cut decision, along with lack of hawkish comments during the FOMC Press Conference, also led to the dollar’s sell-off.     

In terms of the trade war, the cancellation of the APEC summit and China’s doubts on reaching a long-term trade deal US counterparts further worsen the sentiment for the dollar. Despite consensus reached between both parties as reported by US Secretary Treasury, Steven Mnuchin, over the weekend, the market remains skeptical towards the possibility of both sides to end the trade war anytime soon. 

Last Friday, the US released its monthly Non-farm Payroll (NFP) data, along with their Unemployment rate. October’s NFP exceeded its expectations of 89K, with a bullish reading of 128K, while the unemployment rate was hitting hope at 3.6%, proving a resilient labor market in the country. 

The robust job data initially provided support for the index back above its 97.00 level. However, sentiment had a significant turn after the later release of US manufacturing data on the same day. The ISM Manufacturing PMI fell lower to 48.3%, missing its forecast of 48.9% while still signaling contraction for the production sector. Confidence towards the index quickly diminishes, causing it to closed last Friday’s session near 96.80.