• On Friday, the US dollar extends its good streak, and the DXY Index exceeds 107.00 for the first time in over two weeks.
• Signs of continued inflation pressure in the US boost USD strength.
• Friday’s session was not luxurious in any significant macroeconomic events.

The US Dollar Index (DXY), which measures the value of the US dollar against a basket of currencies, is neutral on Friday with slight gains during the US trading session. The dollar is under some profit-taking pressure after edged gains against many major G20 currencies earlier in the week. This revision follows the release of recent Chinese economic data and additional details about the stimulus package being implemented by the Chinese government.
Additionally, the US dollar appears to be gaining strength due to rising US Treasury yields, which appear to be offsetting the fact that markets are virtually pricing in a cut from next week’s Fed decision.

Daily market recap: Hot November PPI and Chinese stimulus impact market sentiment on serene Friday

• November’s PPI reached a high level, recording a substantial boost of 3.0% y/y, exceeding the expected 2.6%. Data for October were revised to 2.6% (previously 2.4%).
• Core PPI (excluding food and energy) increased by 3.4% y/y, exceeding analysts’ forecast of 3.2% and revising the October reading to 3.4% (previously 3.1%).
• PPI Services (excluding trade, transport and warehousing) remained at an elevated level of 4.6% y/y, suggesting that core inflation is sticky.
• Some analysts are downplaying the data due to a 56% boost in egg prices, but core PPI still accelerated to its highest level since February 2023, pointing to broad-based inflation pressures.
• Despite the scorching inflation data, markets have fully priced in the Fed’s 25-basis-point rate cut for next week, with many analysts forecasting a hawkish cut that will trigger a pause in January.

DXY Technical Outlook: Indicators show resilience, but upside is restricted

The US Dollar Index continues to hold above 107.00, maintaining its recovery from recent declines. On Friday, DXY managed to stay above key levels despite mixed sentiment and speculation about the Fed’s next move.

The RSI and MACD indicators suggest that DXY has recovered but may encounter resistance around 107.00-107.50.
If the index breaks above this area, it could retest the 108.00 level, but momentum appears to be slowing down, potentially limiting further gains in the compact term.