Today, the dollar is unusually strong in the first half of the day. The dollar index (USDIDX) is up 0.16%, and the two nrsts even lost 0.20% during the day. However, the current phenomenon is a reaction to the declines that occurred in the first week of May after a short period of consolidation at the highs from the end of April. As you can see on the chart, the recent movement of the dollar has moved the USDIDX price to the level of the local highs of January 2023.
Source: xStation 5
The behavior of the dollar in the coming weeks could be an indicator of the direction of the development of stock indexes and other risky assets. That’s why the bite is a potential direction indicator. The last few weeks have been similar to the review of every investor regarding the first summer dream of annual rates. At the same time, a moderate increase, however, increased the value of less risky assets, such as the dollar. For this reason, theoretically, the potential for data is usually exhausted. After the Fed’s decision and the initially weak labor market, we observed calmer moods and an outflow of capital from the dollar. These declines were supported by falling oil prices (OIL.WTI) and rising ten-year bond prices (TNOTE), which are highly correlated with the dollar. In the graph not shown, we can see that the movements on TNOTE and oil indicate another decline in USDIDX. Assuming a continued trend in this direction, we can expect sustained pressure on the dollar.
Source: xStation 5
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