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Big Week For USD
The US Dollar is trading lower across early European trading on Monday, as traders brace for an important week for USD direction. Fed’s Powell will speak later today, followed by the headline NFP event at the top of the week. On the back of the Fed’s aggressive .5% rate cut, expectations of similar size cut next month have been fluctuating wildly over the last fortnight. Market pricing is currently tilted back in favour of expecting a smaller .25% hike. However, this could easily shift this week and given that expectations are roughly split, there is plenty of room for a USD directional move if we get any decisive shift in market pricing this week.
Powel on Deck
Looking ahead today, Powell’s comments will be the initial focus point for the week and should set the tone for USD into Friday’s data release. The market is expecting Powell to explore the Fed’s thinking behind the recent rate cut and traders will be carefully scrutinizing his comments for clues as to how the Fed is likely to proceed next month. With Powell likely to reaffirm his comments that the policy path is no set in stone and is subject to incoming data, focus will then turn to Friday’s labour market releases. If we see any fresh downside in this data, USD looks vulnerable to a fresh drop lower as market pricing for a larger November cut jumps higher.
Technical Views
DXY
The index remains below the 100.93 level for now and continues to grind lower though momentum is laboured for now. While below this level, the focus is on a test of the 99.67 level next with the broader outlook remaining bearish while price remains below the broken bull trend line and the 102.46 level.
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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.