US Dollar gains ground amid risk-off mood, Fed Beige Book

• The US Dollar gained traction on Wednesday and trades strong against its main rivals.
• A negative market sentiment made the USD gain interest.
• Building Permits in the US from September came in better than expected. Housing Starts disappointed. 
• Investors await Fed’s Beige Book report, to be released later in the session.

The US Dollar (USD) measured by the US Dollar Index (DXY) rose towards 106.60 and seems to be building strong support around the 20-day Simple Moving Average (SMA). Earlier in the session, the US reported mixed housing data and investors await the Federal Reserve’s Beige Book to continue placing their bets on the next monetary policy decisions from the American central bank. Several Fed officials will also be on the wires during the American session.

The United States’ economic activity is holding strong revealed by the latest reports including S&P Global PMIs, Industrial Production and Retail Sales. However, the Beige Book gives a clearer outlook on the current US economic situation through interviews with key business contacts, economists, and market experts gathered by each of the 12 Federal Reserve Districts.

Daily Digest Market Movers: US Dollar gains ground as markets turn cautious ahead of Fed’s Beige Book

• The US Dollar DXY rose near 106.60, seeing 0.40% daily gains.
• Building Permits from the US from September came in at 1.475M, higher than the 1.450M but still lower than the previous 1.541M.
• Housing Starts rose in September but lower than expected, coming in at 1.358M, lower than the 1.380M but above the last reading of 1.269M.
• The Fed’s Beige Book will provide a clearer outlook on the US economic activity and labour market situation.
• In the meantime, US yields are slightly rising, and the 2, 5 and 10-year rates rose to 5.21%, 4.92% and 4.91% respectively.
• According to the CME FedWatch tool, the odds of a 25 bps hike in the December meeting rose to nearly 42%. 

Technical analysis: US Dollar Index’s bulls step in and present battle at the 20-day SMA

The DXY index managed to jump back above the 20-day Simple Moving Average (SMA) of 106.25, and technical indicators gained some ground on the daily chart on Wednesday. In the broader context, the index arguably remains in a bullish trend overall, holding above the key 200 and 100-day Simple Moving Averages (SMA). 
With the Relative Strength Index (RSI) pointing north above 50 and the Moving Average Convergence Divergence (MACD) printing lower red bars – both are sending mildly supportive signals. 

Supports: 106.20 (20-day SMA), 106.00, 105.80.
Resistances:106.70, 107.00, 107.30.