Dow Jones Outlook as the US Dollar Index (DXY) Rallies

The Dow Jones recovery gained momentum as investors waited for the upcoming retail earnings. The index also rallied as the US dollar index (DXY) rebounds. It rose to a high of $34,000, which was the highest point since May 5th. The Dow has risen by over 14% from its lowest level this year.

US dollar index and retail earnings

The Dow Jones index rose sharply as the DXY index rose by more than 0.80% as investors focused on the weakening China economic data. Historically, the blue-chip American index tends to have an inverse relationship with the US dollar. Indeed, the Dow Jones has risen sharply as the dollar has pulled back from $109 to about $106.

The next key catalyst for the Dow Jones will be the upcoming earnings from the biggest retailers in the United States. Some of the top retailers to publish their results will be companies like Walmart, Target, Home Depot, and Lowe’s. These results will provide more color about the state of the retail industry in the US. In July, Walmart surprised investors when it lowered its forward guidance. 

The Dow Jones will also react to the latest American retail sales that are scheduled for Tuesday. These numbers will likely show that the overall retail sales declined in July because of the red-hot inflation data. The other important catalyst for the index will be the upcoming minutes by the Federal Reserve. Historically, these minutes tends to have an impact on American indices like the S&P 500 and the Nasdaq 100.

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