Dollar Index Renews Highs Since October 2002

As we noted in our yesterday's review, the DXY dollar index rose by more than 2% last week, breaking through the next local resistance level 108.00. At the beginning of this week, it continues to grow, having reached a new local high since October 2002 at 109.20 today. The 110.00 mark is now the next upside target for the DXY.

However, the dollar could correct lower today if preliminary US manufacturing and services PMIs (from S&P Global) and US new home sales are disappointing. Their publication is scheduled for 13:45 and 14:00 (GMT), respectively. Tomorrow, dollar volatility could also pick up sharply at 12:30 pm (GMT) when the US Census Bureau releases its durable goods and capital goods orders data. Their growth is expected in July, by +0.6% and +0.3%, respectively. If the data turns out to be significantly weaker than the forecast, then the dollar will be under pressure. But so far we can only talk about correction.

In general, the upward dynamics of the dollar remains, and market participants will follow the progress of the annual economic symposium in Jackson Hole, Wyoming, which is organized and sponsored by the Fed. It will start on Thursday. Of greatest interest will be the speech of Fed Chairman Powell, which is scheduled for Friday at 14:00 (GMT). Probably, the statements made by the head of the Fed Powell at this forum will confirm the tough intentions of the leadership of the American central bank to overcome high inflation, which will further strengthen the dollar.

At the very least, the minutes from the July meeting published last Wednesday confirmed the intention of the Fed's leadership to fight inflation resolutely, including by consistently tightening monetary policy. And this is an argument in favor of further strengthening of the dollar.