Dollar index hardly moves on China news
- China calls reduced China UST buying as fake news.
- Dollar index remains flatlined.
China has reportedly dismissed claims of reduced US treasury buying as wrong information, but the news has not had a material impact on the dollar index (DXY), leaving it largely unchanged on the day at 92.37.
The greenback was sold across the board in the overnight trade after news hit the wires that China could reduce the amount of Treasury purchases or halt buying the treasuries. China is the largest buyer of US treasuries and hence the demand for US dollar would drop sharply if it trims its purchases or stops purchases altogether.
Consequently, the DXY fell to a low of 91.92. However, the dip was short-lived as analysts believe China has no option but to channel back the dollars it earns via persistent trade surplus into US treasuries. Hence, the dip to 91.92 was short-lived and the index moved back to 92.30 levels in Asia.
Ahead in the day, the greenback could take cues from the bond yields and the stock markets. US PPI due scheduled for release today could also influence the dollar.
Dollar Index Technical Levels
A break above 92.64 (Jan. 9 high) would open up upside towards 93.00 (zero levels) and 93.16 (Dec. 20 low). On the downside, breach of support at 92.10 (Dec. 29 low) could yield 91.92 (previous day's low) and 91.76 (Jan. 2 low).