USD Soft Following Mixed Data
The US Dollar continues to trade with a weaker tone as we cross through the back end of the week, with the DYX pulling back from recent highs. There is a clear sense of caution ahead of tomorrow’s headline NFP readings as traders brace for potential volatility. Yesterday, a stronger-than-forecast ADP reading helped lift USD on the back of weakness seen in response to a softer JOLTS number the day before. However, advance quarterly GDP was then seen below forecasts at 2.8% from 3% prior and expected, leading USD lower again. Today, traders will turn their attention to the latest core PCE data. Failing any meaningful surprises, price action is likely to stay muted ahead of tomorrow’s jobs data.
NFP Expectations
Tomorrow’s US jobs data will be decisive for USD direction into the US elections. With a November cut of .25% priced in, the bigger impact will be on the outlook for a further cut in December. Pricing for a further .25% cut in December is currently around 70%. If the NFP falls back as expected tomorrow (111k vs 243k prior), this should keep that view intact. Any undershooting would likely see that pricing rise, leading USD lower. However, if the NFP surprises on the upside, like last month, this could see that pricing falling below 50%, pushing USD firmly higher at a time when the risk of a further Trump presidency is also boosting USD.
Technical Views
DXY
The rally in DXY has stalled for now atop the 104.05 level with price now retesting the level from above. If we slip back below here, focus shifts to 102.46 as deeper support, in line with falling momentum studies readings. While above here, 105.97 remains the next bull 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.