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DXY On Watch
The US Dollar is starting the week with a softer tone as the DXY pulls back from Asian-session highs through early European trading on Monday. This is a big week for the greenback, with a slew of tier-one data due, and the final week before the US elections next week. On the data front, traders will be watching the JOLTS job openings number, advance quarterly GDP, ADP employment figure, core PCE, manufacturing PMI and finally, the headline NFP dataset on Friday.
Two-Way Data Risks
Given the rally we’ve seen in USD over the last month, the market is vulnerable to a move lower if we see any meaningful downside surprises this week. The headline NFP release will be the key reading to watch. An upside surprise last month saw traders rapidly dismantling bets for a further .5% cut in November, leading USD firmly higher. Any further strength this time around should further erode easing expectations, driving the USD rally higher. However, if we see any downside surprise, USD is vulnerable to a long squeeze as traders rebuild Fed easing expectations ahead of year end.
US Elections
A shift in the US elections outlook is also driving USD here. Over the last fortnight or so polling results have reflected an increased likelihood of Trump winning. While the two-candidates are still tied in most national polls, markets have begun to price in the risk of a fresh Trump presidency, hence the stronger USD. If this narrative gains ground into the polls, USD stands to move sharply higher if Trump does succeed next week.
Technical Views
DXY
The rally in the Dollar has seen the index climbing back above the 104.05 level last. With momentum studies bullish, focus is on a continued push higher and a challenge of the bearish trend line from 2023 and YTD highs, ahead of the 05.97 level. Downside, 102.46 is next support to note.
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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.