The US Dollar Index (DXY) has rallied after a three-week losing streak, rising to 102.83 during the early hours of Monday’s Asian trading session. The greenback’s gauge versus the six major currencies has benefited from the market’s risk aversion and cautious mood ahead of key US activity data and jobs reports for March. The recent recovery in DXY prices can be attributed to a combination of factors, including OPEC+ supply cuts, mixed US data, and the Federal Reserve’s hesitance to let doves in.
Mixed US Data and Fed’s Hesitance:
DXY had been declining for the last three weeks due to receding fears of a bank crisis and downbeat US data. The Federal Reserve (Fed) policymakers have also been unable to convince the market of their hawkish capacity, further weighing on the US Dollar Index. However, the recent news of the oil supply cut from the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, known as OPEC+, has renewed inflation fears and propelled concerns of higher rates. This, in turn, underpinned the US Dollar’s haven demand.
OPEC+ Supply Cuts:
The weekend announcement of OPEC+ supply cuts has boosted the US Dollar Index. The OPEC+ alliance has agreed to extend the current oil output cuts through April, a move that could help stabilize oil prices and prevent inflation. This news has pushed up crude oil prices, which, in turn, has increased the demand for the US Dollar.
The US Dollar Index has also been supported by Sino-American tension, which continues to weigh on market sentiment. The ongoing trade dispute between the US and China has led to a decrease in demand for the Chinese Yuan, thereby increasing the demand for the US Dollar.
The pre-NFP anxiety has also played a role in the recent recovery of the US Dollar Index. The non-farm payroll (NFP) report is a key economic indicator that measures the number of jobs added or lost in the US during the previous month. The report, due later this week, is expected to show an increase in job creation for March. The anticipation of a positive NFP report has increased the demand for the US Dollar.
In conclusion, the US Dollar Index has risen on the back of OPEC+ supply cuts, mixed US data, and the Federal Reserve’s hesitance to let doves in. Sino-American tension and pre-NFP anxiety have also supported the US Dollar’s recovery. The recent rally in DXY prices highlights the importance of monitoring economic indicators and geopolitical developments that affect the value of the US Dollar.