US Dollar edges up ahead of Super Tuesday, PMI data

• The US Dollar trades in the green against all major G20 peers.  
• Markets brace for US PMI numbers after digesting disappointing comments out of China’s National People’s Congress.
• The US Dollar Index still orbits around 104.00, and PMI data could be market-moving. 

The US Dollar (USD) fires up on the second day of the week with Super Tuesday taking place, with former US President Donald Trump expected to further book gains in the needed votes to become the candidate for the Republican Party. Overnight, the US Dollar got a boost as markets were disappointed with the economic headlines coming from China’s National People’s Congress (NPC). Markets were expecting more stimulus from the world’s second-largest economy, and are now punishing the Chinese Yuan (CNY), which helps the Greenback gain ground. 

On the economic calendar front, S&P Global will publish the final reading of the Services and Composite Purchasing Managers Index (PMI) numbers for February. More importantly for markets, the Institute for Supply Management (ISM) is set to release its own PMI data for the US Services sector. With this agenda, markets will have plenty of data to digest and to position ahead of the European Central Bank (ECB) rate decision on Thursday and other important US data releases at the end of the week. 

Daily digest market movers: First waves underway

• Tuesday’s economic calendar kicks off with the Redbook Index at 13:55 GMT. The previous reading was at 2.7%.
• S&P Global will release its final Purchasing Managers Index numbers for February at 14:45 GMT:
  • The preliminary Services index came in at 51.3.
  • The Composite PMI was at 51.4, and markets don’t expect it to be revised. 
• At 15:00 GMT a big slew of data is to be released:
  • The ISM Services data for February:
    • The headline Services PMI is expected to fall from 53.4 to 53, still above the 50.0 threshold that signals expansion.
    • The Services Employment Index came in at 50.5 in January, the Prices Paid was at 64, and the New Orders Index stood at 55.
  •  US Factory Orders for January are expected to decline 2.9% in January after a slight 0.2% increase in December..
  • The TechnoMetrica Institute of Policy and Politics (TIPP) will release the Economic Optimism Index for March. The indicator is expected to rise to 45.2 from 44 a month earlier.
• Fed’s Vice Chairman Michael Barr is set to deliver two speeches on Tuesday: one at 17:00 GMT and one at 20:30 GMT. 
• Equities are disappointed with the light measures that were discussed on the first day of China’s National People’s Congress. Markets were expecting more and are sending nearly all major indices down by 0.50%. All three US equity futures are in the red as well ahead of the US opening bell. 
• According to the CME Group’s FedWatch Tool, expectations for a Fed pause in the March 20 meeting are at 97%, while chances of a rate cut stand at 3%. 
• The benchmark 10-year US Treasury Note trades around 4.19%, roughly sideways seeing last week’s range. 

US Dollar Index Technical Analysis: China fuels US Dollar

The US Dollar Index (DXY) gets a bit of a tailwind out of an unexpected corner as China disappointed markets. The measures that came out of the National People’s Congress are being written off as too little, with traders switching away their long Renminbi bets and allocating them to long US Dollar positions. 

The 100-day Simple Moving Average (SMA) near 103.91 got snapped this Tuesday, where a daily close above would be quite a bullish signal. Should the US Dollar be able to cross above it, 104.60 is het next first target ahead. A firm step beyond there 105.88 comes into reach, the high from November 2023. Ultimately, 107.20 – the high of 2023 – could come back into scope. 

Looking down, the 200-day Simple Moving Average at 103.74 has been broken a few times recently, though it has not seen a daily close below it last week, showcasing its importance. The 200-day SMA should not let go that easily, so a small retreat back to that level could be more than granted. Ultimately, should it lose its force, prices could fall to 103.22, the 55-day SMA, before testing 103.00.