Dollar Rally Pauses On Soft Data
DXY Stalls
The US Dollar is lower today amidst a downturn in Fed rate hike expectations on the back of softer US data yesterday. Weak US consumer sentiment and JOLTS job openings numbers saw market pricing for an October hike plunge to around 50% from above 70% prior. The reaction shows just how sensitive rate-hike expectations are to incoming data.
US Data on Watch
Focus now turns to today’s readings with the ADP jobs number, final quarterly GDP reading and core PCE all due. Any further weakness today should see market pricing dipping firmly back under the 50% level fuelling a covering of recent USD longs into Friday’s headline NFP release. In particular today, the ADP print will be closely watched (often used as a gauge for the NFP number), especially given the drop in JOLTS data seen yesterday.
Jobs Data Key
If today’s ADP release is soft (exp 73k vs 38k prior), this could strengthen the view that Friday’s data is likely to be soft also, fuelling heavier long covering ahead of that release. On the other hand, if today’s three key readings come in strong, we should see October hike pricing rebounding and USD turning higher into Friday’s data accordingly. A such, plenty of volatility risk in USD today and into Friday’s headline NFP release.
Technical Views
DXY
The rally in the index has stalled for now into a test of the bear trend line from the YTD highs. With momentum studies still bearish and price still within the bull channel, focus is on a continuation higher towards the YTD highs and 101.91 level next. Only a shift below the 100 level would negate this view, turning focus to 9..15 as the next bear target.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.