The US dollar index extended its rally to a sixth day after the ISM services came in at 59.7 versus the 56.2 expected and with new orders at 13 years high. Furthermore, new home sales came in at 3.7 percent versus the expected -8.7 percent, beating expectations. However, the US dollar appreciation was muted after a gloomy day for global markets; S&P 500 futures fell with European shares, while Asian stocks were steady as a rally in Shanghai was offset by losses in Tokyo in yesterday’s trading session. In the overnight Asian session, the US dollar was also helped by the Aussie dollar, which collapsed after the nation's growth slowed. The lack of movement in different capital markets is a bit surprising considering the positive news out of China’s NPC, which suggested more easing measures than the market expected.
Regarding the US-China deal, Trump is growing increasingly concerned that the lack of an agreement will drag down stocks, so Trump is apparently pressuring US negotiators to reach a trade agreement with China very soon. On the flip side, former Chinese finance minister Lou Jiwei said that China won’t make significant concessions to reach an accord and described some US demands as “just nitpicking.” This morning, the OECD cut its global growth forecast, citing trade tensions.
At the time of this writing, the US dollar index is trading at 96.92; however, it left the strong uptrend that started last week. It touched a low of 95.82 on February 28th and then reached an intraday high of 97.00 in yesterday’s overnight trading, right at the same moment when the EUR/USD touched an intraday low of 1.1286. At this point, given that the US dollar is outside of the uptrend, technically speaking, the US dollar is in a “wait and see” setup.