USD Supported On Dips But Dollar Index Well Below Key EMAs

The USD index made fresh lows back to March of this year in the first part of trade (BBDXY USD index slipping under 1231) before sentiment stabilized. We were last 1233.5. Still, we are a long way from the 20-day EMA, back near 1247.5.

• We have key event risks later in the week in terms of Fed Chair Powell speaking at the Jackson Hole symposium. This may be reducing incentives to extend USD shorts, particularly in light of the recent sell-off.
• USD/JPY got to 145.85 in early dealings, but now sits more than 100pips higher, last near 147.00, close to 0.30% weaker in yen terms. US yields were down a touch in the first part of dealing but sit slightly higher now, so providing some support at the margins.
• A potentially cleaner position slate for USD/JPY (with investors turning more neutral last week per CFTC data) may also be aiding dips in the pair.
• Equity sentiment has mostly remained positive, except for China/HK losses, which were weighed by on-going property market concerns. This has likely weighed on the AUD, although we are down 0.20% for the session. The RBA minutes reiterated on extended hold for the central bank.
• NZD/USD is close to unchanged, last near 0.6115. We had second tier data earlier on trade and house sales, which didn't shift sentiment. The AUD/NZD cross sits off recent highs, last around 1.0980.
• We have Fed speak later (Bostic & Barr), and the August Philly Fed non-manufacturing index prints. The final July euro area CPI and Q2 negotiated wages as well as Canada’s July CPI print will also be in focus.