- The US dollar index (DXY) rose for the third straight day as investors reacted to the strong JOLTs data.
- The strong JOLTs data came two days after the impressive nonfarm payroll numbers.
- The index also reacted to the likelihood of a stimulus deal in Washington.
The US dollar index (DXY) is up for the third straight day as investors react to the impressive jobs data from the US and the possibility of a stimulus deal in the US. The DXY is trading at 93.45, which is significantly higher than last week’s double bottom at 92.55.
US jobs data impressive
On Friday, the Bureau of Labour Statistics (BLS) released relatively strong jobs numbers from the US. The data showed that the economy added more than 1.8 million jobs in July as the unemployment rate fell to 10.2%. These numbers were better than what analysts were expecting.
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Today, data from the bureau showed that the number of job openings increased to 5.9 million on the last day of June. That was better than the 5.3 million on the last day of May. The number of people hired in June declined slightly to 6.7 million, the second highest in history. The number of separations increased to 4.8 million while quits rose to 1.9%.
Most of the created jobs were in the accommodation and food services, other services, and arts. Job openings fell in the construction and education sectors.
The pace of job creation means that the US economy is on the right path. However, there are several key concerns. First, the number of coronavirus cases in the country has been rising, putting the recovery at risk. Yesterday, the number of coronavirus cases in the country passed the 5 million milestone. This growth has led many states to halt the reopening.
Second, there is a key risk about US relationship with its key trading partners. Earlier today, China announced new sanctions on eleven American officials, including senators Marco Rubio and Ted Cruz. This decision was in retaliation to Trump’s decision to put sanctions on Chinese and Hong Kong officials. Meanwhile, the US has restarted a trade war with Canada after the US added new tariffs on the country’s aluminium.
Third, there is a risk of stimulus in the US since Democrats and Republicans have disagreed on the amount and structure of the package. However, today, Steve Mnuchin said that there was a possibility that the two sides will reach a deal this week. He said:
“I think there is a compromise if the Democrats are willing to be reasonable. There is still a lot of things we need to do and that we’ve agreed on.”
US dollar index forecast
The daily chart shows that the US dollar index is up for the third consecutive day. The price is slightly above the 50-day Hull moving averages but below the 100-day HMA. The price has also found a strong support at the current range. The shape of this support seems to be a bearish pennant, which is usually a continuation pattern. This means that the price is likely to continue falling after the current consolidation.