- The positive American dollar for this week, firing in the range where it is against most of the big peers.
- China has denied comments because commercial negotiations are underway between China and the United States.
- The US dollar index remains capped below the round level of 100.00.
The US dollar index (DXY), which follows the performance of the US dollar (USD) compared to six major currencies, is negotiated on the front foot, up 0.40% on Friday at the time of the editorial staff. Traders are divided, however, after the United States and China have left contradictory comments on the question of whether trade transactions are held. The United States President Donald Trump said on Thursday that the United States was talking to China, supported higher stock markets and promotes the yield of the greenback.
In addition, citing sources familiar with the issue, Bloomberg reported on Friday that China was thinking of suspending its 125% price on certain American imports, including medical equipment, ethane and aircraft rental. However, the Chinese Foreign Ministry said that “China and the United States have no consultations or negotiations on prices”. Asked about tariff exemptions on certain American products, the spokesman for the Ministry of Foreign Affairs said: “I do not know the details, I refer you to the competent authorities.”
On The economic calendar Before, there is a very light calendar to come. The Federal Reserve (Fed) began its breakdown period before its next meeting of the Federal Open Market Committee (FOMC) on May 7. Meanwhile, this Friday, traders can examine final reading in April for the number of feelings of consumers from the University of Michigan and inflation expectations.
Daily Digest Market Movers: China denies
- Before the American trade session, US President Trump confirmed that the United States and China were in talks, even confirming to Reuters that Chinese President Xi Jinping was on the phone with the American president. Trump did not disclose business discussions with whom. Meanwhile, the rumor was confirmed by the American secretary of the Treasury Scott Bessent. Details on the content or when an agreement is expected is summary.
- China on their side always denies talks and require that these unfounded rumors end. In addition, China first requests to see all the prices imposed removed before the talks can be taken into account.
- The University of Michigan published its latest reading for April.
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- The consumer feelings index came to 52.2, from 50.8 in preliminary reading.
- Consumer inflation expectations at 5 years remain 4.4%.
- The actions are starting to doubt Trump's comment because there is no reason why China firmly denies this news. European actions are slightly higher, while future American people become negative.
- The CME Fedwatch tool shows the chances of a drop in the interest rate by the federal reserve at the May meeting of 6.1% against a probability of 95.3% without change. The June meeting still has approximately 61.4% of a drop in rates.
- American yields at 10 years are negotiating around 4.28%, looking for directions while the markets are facing instinctive reactions on Trump's comments.
Technical analysis of the US dollar index: end month in advance
The US dollar index (DXY) might seem optimistic and should jump higher once the titles emerge from a possible trade agreement between China and the United States, while rumors are now strengthening to this possibility. However, a great downward risk is accompanied by a potential peace agreement between Russia and Ukraine, which would stimulate the euro (EUR) and weigh on the DXY. So there are a lot of mobile pieces that could prevail over the advantages or disadvantages for the United States Dollar index.
Uplining, the first resistance of the DXY arrived at 99.58, where a false break occurred on Wednesday and Thursday. If the US dollar extends recovery, are looking for 100.22, which supported the DXY in September 2024, with a break above 100.00 round as a bull signal of their return. A firm recovery would be a return to 101.90.
On the other hand, support 97.73 could quickly be tested on any substantial downside. Further below, relatively thin technical support is available at 96.94, before looking at the lower levels of this new price range. It would be 95.25 and 94.56, which means fresh stockings that we have not seen since 2022.
US dollar index: daily graphic
Central Banks FAQ
Central banks have a key mandate that ensures that there is price stability in a country or region. The savings are constantly faced with inflation or deflation when the prices of certain goods and services fluctuate. The constant increase in prices for the same goods means inflation, the constant prices lowered for the same goods mean deflation. It is the task of the central bank to maintain demand online by refining its policy rate. For the largest central banks such as the American Federal Reserve (Fed), the European Central Bank (ECB) or the Bank of England (BOE), the mandate is to maintain inflation close to 2%.
A central bank has an important tool at its disposal to increase higher or lower inflation, and it is by refining its rate of reference policy, commonly known as interest rate. On pre-communicated moments, the Central Bank will publish a declaration with its policy rate and provide additional reasoning on the reasons why it is left or changed (hiking). Local banks will adjust their savings rates and their loan rates accordingly, which in turn will make people more difficult or easier for people to gain on their savings or for companies to contract loans and invest in their business. When the central bank considerably increases interest rates, this is called monetary tightening. When it reduces its reference rate, monetary softening is called.
A central bank is often politically independent. The members of the Central Bank Policy Board are going through a series of panels and audiences before being appointed to a seat of the board of directors. Each member of this council often has a certain conviction on how the central bank should control inflation and subsequent monetary policy. Members who wish a very loose monetary policy, with low levels and cheap loans, to considerably stimulate the economy while being contained to see inflation slightly greater than 2%, are called “doves”. Members who want to see higher rates to reward savings and want to keep an allusion to inflation at any time are called “hawks” and will not rest until inflation is below 2%.
Normally, there is a president or a president who directs each meeting, must create a consensus between the hawks or the doves and has his last word to be summed up in a vote to avoid equality of 50-50 on the fact that the current policy is adjusted. The President will pronounce speeches which can often be followed live, where the position and the current monetary perspectives are communicated. A central bank will try to advance its monetary policy without triggering violent fluctuations in rates, actions or its currency. All members of the central bank will channel their position towards the markets before a political meeting event. A few days before a political meeting takes place until the new policy is communicated, members are prohibited from speaking publicly. This is called the electricity period.
