DXY prods pullback from 11-week high above 103.00 on sluggish yields, US data eyed

• US Dollar Index stabilizes after posting the biggest daily loss in three weeks.
• Anxiety ahead of top-tier data, events challenge bond buyers, DXY sellers.
• Downbeat PMIs renewed concerns of Fed policy pivot and weighed on the yields, Greenback.
• US Durable Goods Orders and clues about activity, employment will decorate calendar as Jackson Hole event begins.

US Dollar Index (DXY) portrays the market’s cautious mood around 103.35-30 as the annual Jackson Hole Symposium event begins on Thursday. The Greenback’s gauge versus the six major currencies dropped the most in three weeks while reversing from the highest since June 08 the previous day. While tracing the catalysts, the broad risk-on mood and a slump in the US Treasury bond yields could be held responsible for the DXY’s slump.

On Wednesday, major economies including the US printed a downbeat Purchasing Managers Index (PMI) for August and renewed concerns about the policy pivot at the major central banks. The same joined upbeat headlines surrounding the US-China trade ties to drown the US Treasury bond yields and the US Dollar afterward.

Talking about the data, US S&P Global Manufacturing PMI dropped to 47.0 for August from 49.0 versus 49.3 market forecasts whereas the Services counterpart also edged lower to 51.0, compared to 52.2 expected and 52.3 marked the previous month. With this, the S&P Global Composite PMI for the US eased to 50.4 for the said month from 52.0 prior and the analysts’ estimations. Further, US New Home Sales change rose to 4.4% MoM for July versus -2.5% previous readings.

Elsewhere, US Commerce Secretary Gina Raimondo’s visit to Beijing, scheduled for next week, flags hopes of improvement in the US-China trade ties. On the same line are the early-week news suggesting the US removal of 27 Chinese entities from its Unverified List, lifting sanctions from those entities and flagging hopes of improving diplomatic ties.

Against this backdrop, the Wall Street benchmarks also closed on the positive side while the US 10-year Treasury bond yields flashed the biggest daily fall in three weeks to portray the market’s optimism and weigh on the DXY’s haven demand.

Looking ahead, the US Durable Goods Orders, Chicago Fed National Activity Index, Kansas Fed Manufacturing Activity and weekly Jobless Claims will decorate the calendar. However, major attention will be given to the start of the two-day-long annual Jackson Hole Symposium for clear directions of the US Dollar Index. It should be noted that Friday’s speech of Fed Chair Jerome Powell will be closely watched as the recent US data and interest rate futures point towards the US central bank’s policy pivot but Fed’s Powell isn’t known for his dovish style.

Technical analysis

US Dollar Index reveres from a downward-sloping resistance line from early March, around 103.50 but the bears need validation from the 200-DMA support of 103.15 to retake control.