US Dollar sees some gains after NFP and sentiment data
- DXY trended higher toward 106.00 on Friday.
- November’s NFP report showed a large beat on job creation.
- Sentiment data from December came in strong.
The US Dollar Index (DXY), which measures the value of the USD against a basket of currencies, gained toward 106.00 on Friday, driven by several key movers. The US Dollar remained flat after the release of Nonfarm Payrolls (NFP) data, while markets anticipated a potential December rate cut by the Federal Reserve (Fed).
The DXY found support at 105.50 and advanced toward 106.00 amidst this news. As a result of anticipation of a rate cut, a dovish stance from the Fed would, in general, cause a decline in the DXY. However, the market is leading to strength in the US Dollar despite this news.
Daily digest market movers: US Dollar sees some gains after NFP data
- The US Dollar Index advanced toward 106.00 as several key factors influenced its movement.
- The NFP surged by a noteworthy 227,000 in November, far exceeding market expectations of 200,000.
- The Unemployment Rate experienced a slight uptick to 4.2% in November.
- Monthly Average Hourly Earnings posted a steady 0.4% gain, meeting the previous month's reading.
- Consumer Sentiment climbed to 74 in December, surpassing market projections.
- The University of Michigan's 5-year Inflation Expectations rate declined to 3.1%.
DXY technical outlook: Bulls fights back, holds 106.00 level
The DXY halted its descent and gained ground today, indicating resilience. This move comes despite profit-taking activity. The index is currently aiming to recover its 20-day Simple Moving Average (SMA), and as long as it remains below there, it could exacerbate its short-term difficulties.
On the other hand, the bullish trend for the DXY remains robust, with resistance points located at 106.50 and 107.00. Support is anticipated within 105.50 to 106.00.
US Dollar FAQs
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. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from the Bank for International Settlements. Following the Second World War, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold until the Bretton Woods Agreement in 1971, when the Gold Standard went away.