US Dollar Index claws way back to 79, will help cap higher oil prices

The ICE US Dollar Index has been sliding since the 13 January 2012 where it registered a high of 82.040, however the dollar was stronger today, registering 78.595 as the index claws it’s way back to the 79 / 80 level which will help cap oil prices.

Latest Dollar Index Rate

The ICE US Dollar Index, which tracks the US dollar against six major world currencies was trading at 78.595 15.21 GMT today, from the session open of 78.578.

The index continues to trade within the confines of a descending channel formation and rose as some of the investment money in oil and commodities flowed into currencies. The US dollar rebounded from a near three month low against the euro and retreated from a nine month peak versus the Japanese yen.

Dollar v Euro

Currency investors sidestepped news that Standard & Poor’s cut its ratings on Greece to “selective default” as Athens’ efforts to lighten its debt burden was largely expected to trigger the downgrade.

They also took in their stride the ECB’s temporary suspension of Greek bonds as collateral for its funding operations as well as a solid Italian debt auction.

Still, many were cautious about pushing the euro too much higher ahead of an ISDA ruling on Wednesday. The derivatives body will rule whether a Greek credit event has taken place after the country began a bond swap process.

The euro stood at $1.3444, up 0.3 percent on the day, trading not far from a near three-month peak of $1.3487 set on Friday. Traders cited decent offers at $1.3480 and a reported option barrier at $1.3500 which would check gains.

Immediate support for the common currency is seen in the $1.3357-66 area around recent lows, with $1.3291 marking the 38.2 percent retracement of the Feb. 16-24 rise.

“The euro has priced in a cash injection of 500 billion euros and anything above 600 billion will be risk positive and push the euro higher,” said Ankita Dudani, G-10 currency strategist at RBS Global Banking.

“The markets have treated the Greek headlines as old news and are focusing on the positives of the ECB liquidity injection tomorrow.” said Vassili Serebriakov, a currency strategist at Wells Fargo & Co. in New York.

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US Dollar Index claws way back to 79, will help cap higher oil prices