16 Oct 2013
US Dollar index in highs beyond 80.70
FXstreet.com (Edinburgh) -The greenback, gauged by the US Dollar index, is sharply higher on Wednesday as markets are eagerly waiting for the announcement of a deal in the US.
DXY boosted by deal
Finally Democrats and Republicans came to an agreement to avert the default and re-open the 16-day government shutdown, boosting the world’s reserve across the board. The index is now posting multi-week highs beyond 80.70 alongside a continuation of the rally in the equity markets. Jane Foley, Strategist at Rabobank, assessed, “After the debt ceiling debacle in the summer of 2011 was resolved and after the 21 day shutdown of the US government in 1995/96 was overcome, the USD benefitted from a relief rally. However, bearing in mind that QE2 had ended before summer 2011 there is a clear difference between these previous periods of political uncertainty in terms of the policy being followed by the Federal Reserve. We expect that the risk that the Fed will delay any tapering into next year will ensure than any USD relief rally from a temporary resolution to the debt ceiling will be limited this week”.
DXY levels to watch
The index is now up 0.20% at 80.60 with the next resistance at 80.64 (high Sep.26) followed by 81.35 (high Sep.17) and then 81.93 (high Sep11). On the downside, a violation of 79.63 (low Sep.3) would aim for 79.49 (low Feb.6) and then 78.93 (low Feb.1).
DXY boosted by deal
Finally Democrats and Republicans came to an agreement to avert the default and re-open the 16-day government shutdown, boosting the world’s reserve across the board. The index is now posting multi-week highs beyond 80.70 alongside a continuation of the rally in the equity markets. Jane Foley, Strategist at Rabobank, assessed, “After the debt ceiling debacle in the summer of 2011 was resolved and after the 21 day shutdown of the US government in 1995/96 was overcome, the USD benefitted from a relief rally. However, bearing in mind that QE2 had ended before summer 2011 there is a clear difference between these previous periods of political uncertainty in terms of the policy being followed by the Federal Reserve. We expect that the risk that the Fed will delay any tapering into next year will ensure than any USD relief rally from a temporary resolution to the debt ceiling will be limited this week”.
DXY levels to watch
The index is now up 0.20% at 80.60 with the next resistance at 80.64 (high Sep.26) followed by 81.35 (high Sep.17) and then 81.93 (high Sep11). On the downside, a violation of 79.63 (low Sep.3) would aim for 79.49 (low Feb.6) and then 78.93 (low Feb.1).