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US Dollar Index Heads for Second Week of Gains Above 101.00

3:11 AM ETConfirmed

Business Desk

In Short: The Reserve Bank of New Zealand (RBNZ) recently lifted its official cash rate to 2.75% to combat inflation, which remains above target.

The US Dollar Index (DXY), which measures the value of the US Dollar against a basket of six world currencies, is trading near 101.15 in early European trading hours on Friday, according to FXStreet.

Despite a slight decline on the day, the DXY is on track for a second week of gains, driven by surging US Treasury bond yields and increased bets on US rate hikes.

The DXY's Relative Strength Index (14) is hovering in overbought territory near 70.5, suggesting that while upside momentum remains strong, it may be vulnerable to a cooling phase.

Financial markets are experiencing uncertainty and volatility as we move into the final weeks of Q3, with oil prices falling and European and US stocks poised to open higher on Monday.

John, a financial markets expert with over a decade of experience, produces a Weekly Forex Forecast covering over 30 markets each weekend.

In New Zealand, the quarterly GDP rose 0.2%, beating forecasts and increasing year-on-year output to 2.6%, ahead of expectations.

The Reserve Bank of New Zealand (RBNZ) recently lifted its official cash rate to 2.75% to combat inflation, which remains above target.

Globally, economists are closely watching the impacts of the renewed surge in oil prices on inflation, with the European Central Bank and the US Federal Reserve expected to increase rates in the coming weeks.

Background

What's confirmed

• The US Dollar Index (DXY), which measures the value of the US Dollar against a basket of six world currencies, is trading near 101.15 in early European trading hours on Friday, according to FXStreet.
• Despite a slight decline on the day, the DXY is on track for a second week of gains, driven by surging US Treasury bond yields and increased bets on US rate hikes.
• The DXY's Relative Strength Index (14) is hovering in overbought territory near 70.5, suggesting that while upside momentum remains strong, it may be vulnerable to a cooling phase.
• Financial markets are experiencing uncertainty and volatility as we move into the final weeks of Q3, with oil prices falling and European and US stocks poised to open higher on Monday.
• John, a financial markets expert with over a decade of experience, produces a Weekly Forex Forecast covering over 30 markets each weekend.
• In New Zealand, the quarterly GDP rose 0.2%, beating forecasts and increasing year-on-year output to 2.6%, ahead of expectations.
• The Reserve Bank of New Zealand (RBNZ) recently lifted its official cash rate to 2.75% to combat inflation, which remains above target.
• Globally, economists are closely watching the impacts of the renewed surge in oil prices on inflation, with the European Central Bank and the US Federal Reserve expected to increase rates in the coming weeks.

What's still developing

• "Whilst the dollar should get a bid from higher yields, there are still ongoing lingering concerns around the US fiscal position, the unpredictability of US policy making," said Khoon Goh, head of Asia research at ANZ.
• Know more. ) The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes.
• As a result, the US Dollar pauses its pullback, limiting the pair's downside.
• The precious metal’s correction comes on the back of the firmer US Dollar and espite declining US Treasury yields across the curve.
• Fuel oil deficit forecast at 218,000 barrels per day in third quarter as Middle East exports plunge 45%; Singapore bunker prices have risen 76% since Iran war began LONDON: A global shortage of fuel oil used by ships and power plants is looming in the third quarter as war-related refinery and shipping disruptions constrain supplies, while refiners increasingly divert fuel oil towards producing more profitable diesel, gasoline and jet fuel.
• Crude oil has largely avoided major price spikes in recent months, but refined products have come under much greater pressure as attacks on refineries in Russia and the Middle East reduce processing capacity and restrictions on tanker movements disrupt supplies.
• Energy Aspects forecasts a global fuel oil deficit of 218,000 barrels per day (bpd) during the third quarter.
• Signs of the squeeze are already visible in inventories and prices.
• Go beyond the daily forecast and take a deep dive with meteorologist Dan Amarante into weather science and trends in Connecticut.
• With beef prices stampeding burger aficionados this summer, the largest Wendy's franchisee operating in Connecticut filed for bankruptcy protection and asked a judge to force Wendy's to continue supporting it while it goes through a financial restructuring.
• Grand Rapids, Michigan-based Meritage blamed an 18.6% spike in beef prices this summer that has impacted its bottom line, along with what it termed "unusual winter weather" as a result of the La Niña cycle in the southern United States that disrupted sales; and being forced to offer deeper discounts to lure back inflation-weary customers.
• Last weekend, we began to have jitters that were were headed to a slow fall after Practical Magic 2 came in at the low end of its forecast of $30M (still Sandra Bullock’s opening average of late), however, simply put, it’s just about product.

Sources

• FXStreetlink
• Fxstreetlink
• Profitlink
• Ctinsiderlink
• Deadlinelink
• Finimizelink
• Capitalbrieflink
• Fxleaderslink
• Tradingkeylink
• Buccaneerslink
• Currencynewslink
• Abc11link
• Fedscooplink
• WarpBeat — background on EUR/JPY Price Forecast: Trades near 180.50 after breaking above nine-day EMA link
• WarpBeat — background on US Dollar Holds Gains Post-FOMC, MUFG Sees Limited Upside link
• 7Candlesticks Markets — video link