DXY Rising Mid-Week
The US Dollar is seeing a better bid today though remains down from recent highs as uncertainty around the US govt shutdown and Fed expectations continue to muddy the outlook. Yesterday, data from the ADP showed a loss of more than 11k jobs in October, putting focus back on a weaker labour market. With the US govt shutdown expected to come to an end this week (should the compromise bill pass through the House today), we could see postponed data starting to come through as early as next week.
Delayed US Data
Traders will be paying close attention to two delayed NFP reports with any fresh weakness in those data sets likely to see December rate cut pricing jumping, putting fresh pressure on USD. With a rate cut currently priced at around just 63% on the CME FedWatch, there is plenty of room for a dovish shift. With CPI, GDP and other key indicators all to come too, volatility risks look elevated in coming weeks as traders react to these postponed data sets.
Fed Speakers On Watch
Away from the shutdown vote today, traders will also be watching a slew of Fed speakers due this afternoon. Given the uncertainty among policymakers highlighted at the recent FOMC meeting, traders will be keen to hear individual perspectives. If there is any dovish skew to today’s comments, this could keep USD pressured near-term as traders await delayed data releases to come next week. However, if we hear any hawkish commentary pushing back against the need for any further easing this year, USD could start to push higher again.
Technical Views
DXY
The rally in DXY has stalled for now into the 100.39 level with price reversing back down towards the 99.15 level support. While that support holds, however focus is on a fresh push higher and a move north of the 100-mark. Should we break lower, 98.24 will be the deeper support area to watch.
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