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US Dollar Holds the High Ground While Crude Oil Whips Around. Higher USD?

US Dollar Holds the High Ground While Crude Oil Whips Around. Higher USD?


US Dollar, DXY Index, USD, OPEC+, WTI, Brent, Crude Oil, Debt Ceiling - Talking Points

  • The US Dollar held onto Friday’s gains to start the week on lofty Treasury yields
  • OPEC+ cut production with Saudi Arabia playing a key role to hoist oil prices
  • With the debt dilemma out of the way, perceptions of Fed rates could be the USD driver

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The US Dollar added modest gains to Friday’s rally on Monday as markets digest the OPEC+ production cut agenda that was announced over the weekend.

USD had been assisted by a mixed jobs report on Friday that was overall seen as more positive than negative. Currency markets have had a quiet start to the week so far.

339k jobs were added in May according to the non-farm payrolls data. This beat the 195k anticipated and there was also an upward revision to the April figure to 295k from 253k.

However, the unemployment rate ticked up to 3.7% from 3.4% previously and above the 3.5% anticipated.

APAC equity indices have generally had a positive day after Wall Street notched up decent gains in their cash session to end last week after the resolution of the debt ceiling deal lifted the mood. Futures are pointing toward a subdued start to Monday.

The mood was buoyed by China’s Caixin services PMI May reading of 57.1 instead of the 55.2 expected and 56.4 prior.

The OPEC+ announcement of a reduction in oil production output among the cartel saw Saudi Arabia bearing the brunt of cutbacks. They will be reducing their contribution to global supply by 1 million barrels per day.

The UAE received an increase in its production target while Russia’s remains unchanged.

Crude spiked higher on the open today but has since given up a chunk of the gains although prices are still above where they closed the Friday session.

The WTI futures contract is near US$ 72.50 bbl while the Brent contract is a touch below US$ 77 bbl. Live prices can be viewed here.

Treasury yields have remained elevated to start the week with the 1-year bond remaining near the 23-year high above 5.30%.

June 14th is the next Federal Open Market Committee (FOMC) meeting, and the blackout period began over the weekend. This means that committee members will not be making any public comments about policy until after the gathering.

Looking ahead, after the Swiss CPI and Eurozone PPI, the US will see factory and durable goods orders data. Tomorrow the RBA will decide on monetary policy followed by the Bank of Canada on Wednesday.

Check the calendar for more events.

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The DXY index appears to be in a short-term sideways pattern for now. Resistance might be in the 104.70 – 104.80 area where last week’s high was as well as the 76.4% Fibonacci Retracement.

On the downside, support may lie at the recent low of 103.38 or the breakpoint of 102.80.


Chart created in TradingView

--- Written by Daniel McCarthy, Strategist for

Please contact Daniel via @DanMcCarthyFX on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.