Home Daily Commentaries DXY (Dollar Index) holds above 105.00 levels as Investors contemplate outlook for economy and rates

DXY (Dollar Index) holds above 105.00 levels as Investors contemplate outlook for economy and rates

Thursday 8 December, 2022

Daily Currency Update

The DXY (Dollar Index) held above 105.00, peaking at its daily high of 105.375 on Thursday, due to higher U.S. Treasury yields. Investors are weighing the possibility of a future Fed policy against the likelihood that higher interest rates could trigger a recession. The key question for investors and traders is whether inflation has peaked, which would give policymakers more room to deliver smaller interest-rate hikes over the coming months. The US Department of Labor's weekly data, published on Thursday, showed that there were 230,000 initial jobless claims in the week ending December 3. This is an increase of 4,000 from the previous week's revised level of 226,000.

Key Movers

The EUR hovered around the 1.0500 mark against the USD. Investors today will be monitoring European Central Bank President Christine Lagarde's speech for additional inspiration. Christine Lagarde's speech will give clues about what the central bank is likely to do at its December policy meeting. The outlook for the UK economy looks bleak as falling UK house prices add to recession worries. Easing of COVID-19 restrictions in China provides some optimism. GBP/USD is trading around the 1.2200 mark. Following a dovish 50bps hike by the Bank of Canada yesterday, USD/CAD experienced a drop of 60-odd pips. Much of the gains by the Canadian dollar were surrendered during the Asian and European trading sessions today.  The pair is trading shy of the 1.37000 level.  The Canadian dollar is experiencing additional strain as oil prices plunged below $80 a barrel, its lowest point since Russia invaded Ukraine in late February. The tumbling cost of crude is largely attributed to fears about how a slowing economy will curb global energy demand.

Expected Ranges

  • EUR/USD: 1.0488 - 1.0534 ▲
  • GBP/USD: 1.2157 - 1.2231 ▲
  • AUD/USD: 0.6703 - 0.6763 ▲
  • USD/CAD: 1.3687 - 1.3575 ▼