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US Dollar, Treasuries and Huawei:

  • US Treasury’s pick-up a safety bid after US-China tensions increase on Huawei CFO arrest.
  • Friday’s non-farm payroll support eyed for continued USD support.

You can access our Q4 USD Trading Forecasts here.

US Dollar (DXY) Back Above Trendline

After briefly dipping below trend at the start of the week, the US dollar basket (DXY) has pushed back above the bullish trendline as the greenback gets a safe-haven bid. News that Chinese telecoms and electrics giant Huawei’s CFO was arrested in Canada over a possible breach of US sanctions on Iran inflamed an already tense US-China trade backdrop and boosted risk-off assets. Buyers returned to the US Treasury market, pushing yields lower, while risk assets fell sharply with global equity markets taking a hefty hit and trading at or near two-year lows. The US Treasury yield curve remains inverted in the shorter-end (3s-5s), indicating that the Federal Reserve may need to loosen monetary policy from 2020 onwards.

US Dollar Price Action Needs NFP Confirmation, Huawei Hammers Risk

The US economy remains robust but with recessionary fears being stoked by the UST yield curve, Friday’s non-farm payroll report will need to confirm the strength of the economy to keep the US dollar basket (DXY) above trend.

US Dollar Price Action Needs NFP Confirmation, Huawei Hammers Risk

DailyFX senior currency strategist Chris Vecchio will be dissectingthe NFP report live on Fridayfrom 13:15 onwards.

The US dollar basket has broken back above its uptrend and is looking to make a fresh weekly high. DXY currently trades above all three moving averages, with the 20- and 50-day mas now providing support, while the uptrend kicks-in around 96.20. A weak NFP reading may see these support levels tested.

US Dollar (DXY) Daily Price Chart (May – December 6, 2018)

US Dollar Price Action Needs NFP Confirmation, Huawei Hammers Risk

Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.

What is your view on the US Dollar – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author at nicholas.cawley@ig.comor via Twitter @nickcawley1.