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Fed Pushes Back on Rate-Cut Calls
The US Dollar is seeing a decent bid across early European trading on Thursday. Last night, the Fed held its headline policy rate unchanged as expected while adding additional pushback against near-term rate-cut calls. The Fed warned that it was still too early to be expecting rate-cuts (signalling that policy will not be eased in March) while warning that it had ample time this year to ease rates out of restrictive territory. The Fed signalled that growth and inflation were coming into better balance now and warned that, while rate cuts are still expected this year, it will need to see further data before commencing an easing cycle.
NFP in Focus
Looking ahead, focus now shifts to the upcoming labour market data due tomorrow. Given the Fed’s comments around US data, the takeaway is that while data remains strong, near-term rate-cut expectations will remain muted, keeping USD pressured. On the other hand, should data start to weaken, this will be seen as bolstering the chances of a near-term Fed rate-cut, weighing on USD. Given that the bar is set quite low for tomorrow’s headline NFP data (187k expected vs 217k prior), there is plenty of room for an upside surprise to drive fresh USD buying into next week.
Technical Views
DXY
The index is testing above the 103.48 level today following recent consolidation at the level. With momentum studies bullish the focus is on a fresh push higher and a test of the 104.95 level next. To the downside, 101.22 is the main support to note should we drop lower on a surprise undershoot in tomorrow’s data.
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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.