The Dollar index (DXY) is little changed as comments by Dallas Fed’s Robert Kaplan are crossing the wires.
Kaplan is echoing what was said at the latest FOMC rate meeting by saying that he would like to see a material change in the outlook for the economy to move rates. He is also saying that the 4Q GDP growth should be weak, but that the US economy will be able grow by two percent in the next year. The rate markets are currently projecting the Fed interest rate to remain unchanged at the next Fed meeting in December, while they give it a 40.4% probability that the rate will be reduced by 25 bps at the June 10, 2020 meeting.
As the comments are not coming as a surprice to Forex traders, and the rates markets are already position for this outcome, the Dollar index is little changed, but the trend remains upwards for the USD.
As I have reported on in the past the Dollar index bottomed out from the November 1 low of 97.09, and the price has since then tested the bounce from the November low to the November high by declining to the 97.68 level and then turning higher. The short-term trend will remain upwards as long as the price trades above the 97.68 level, and the USD index might reach the median line of the channel seen in the chart below at 98.77, followed by the October 8 high of 99.24.
The longer-term trend in the USD will remain upwards as long as the price trades above the November 1 low of 97.09.